Total Cost of Procurement

Total Cost of Procurement

Identify the elements of the Total Cost of Procurement. What role do these
> elements of logistics play in cost process?
>

…………………Answer Preview………………

There are eleven elements of the Total Cost of Procurement and each element of logistics has its role in cost process. The elements are divided into two: Buying cost and holding costs (Ellram, 2014).

 BUYING COSTS         HOLDING COSTS

1. Price of the commodity                       7. Storage space cost
2. Shopping time          8. Financing of inventory
3. Expediting              9. Control
4. Paperwork            10. Shrinkage
5. Mistakes                11. Taxes, Insurance (Misc.)
6. Internal Handling to the
         final consumption point

            The process of buying something through procurement has six separate……………

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