Total cost of ownership: The perspective that saves logistics projects

The concept of Total Cost of Ownership (TCO) often meets resistance. Not because it's wrong, but because tenders are usually structured differently. If you're looking for the lowest bid price, you'll get it. What you'll actually have after ten years of operation is another matter entirely.

The purchase price of a system is only part of the story. Energy consumption, maintenance requirements, scalability, and ongoing operating costs determine real-world economic performance – over years, sometimes decades. Anyone who factors in these elements only after the investment hasn't made an informed decision. They've made a guess.

That's why Körber evaluates not only the initial investment, but the entire lifecycle of a solution from the very beginning of the planning process. This helps uncover long-term value early and creates a stronger foundation for investment decisions.

Why CAPEX thinking distorts tenders

A procurement process focused on CAPEX (capital expenditure) compares systems on a level that has limited relevance to long-term economic viability. Even relatively small differences in energy consumption or maintenance requirements can accumulate into substantial lifecycle costs – especially in highly automated distribution centers operating at high throughput and across multiple shifts. Differences in energy efficiency, maintenance demands, or limited scalability can also lead to costly retrofits later on.

The problem isn't bad faith on the part of planners. It's an evaluation framework that prioritizes short-term comparability over long-term decision quality. CAPEX is measurable, transparent, and easy to compare. OPEX (operating expenditure) over ten years is complex – and therefore routinely ignored or assumed at a flat rate.

The result: systems that look economical on paper turn out to be expensive in practice.

Conversely, solutions with higher upfront costs can deliver stronger long-term value through lower operating and maintenance expenses.

The parameters that are often overlooked

In practice, TCO discussions tend to focus on a handful of factors. What regularly gets left out:

• Energy consumption under load profiles: Averages are misleading. What matters is how much energy a system draws at peak demand — and whether it scales down efficiently during low-load periods.
• Scalability: A system that fits today but can't grow tomorrow creates either investment bottlenecks or costly redesigns. Scalability is an economic factor.
• Maintenance intensity: Service intervals, spare parts availability, specialist requirements — all of these directly affect OPEX and uptime.
• Ramp-up times and commissioning risk: Complex systems that take longer to stabilize generate costs that don't appear in any catalog.
• Software and system evolution: How does the system keep pace with rising demands? Proprietary architectures can create expensive dependencies over time.
• Sustainability costs: Carbon levies, regulatory requirements, and internal sustainability targets are increasingly becoming fixed planning variables for logistics operators.

None of these factors are obscure – yet all of them are either not required or not systematically evaluated in conventional tenders.

How planners can make TCO the standard

The starting point is simpler than it often seems: TCO doesn't become the standard through complexity. It becomes the standard through consistency.

In practice, that means tenders need to ask the right questions. Not just "What does the system cost?" but "What does it cost to operate this system under realistic load profiles over ten years?" If that question isn't asked, no answer will be given – and no sound basis for decision-making will exist.

To answer such questions with confidence, an integrated technology approach becomes essential. With AIR – Automated, Intelligent, and Regenerative – Körber connects hardware, software, digital systems, and artificial intelligence into networked solutions that reflect how operations truly interconnect. This creates the basis for evaluating not only upfront investment costs, but also efficiency potential, adaptability, and long-term operating costs early in the decision-making process.

Körber reinforces this approach with digital tools such as simulation, digital twins, and AI-driven optimization. Together, they make operational behavior more transparent, allowing long-term performance assumptions to be validated before implementation.

Therefore, we consistently think in terms of TCO – from the planning stage onward. Capital expenditure is evaluated alongside energy efficiency, operating costs, maintenance requirements, and long-term scalability. The goal isn't to sell a system that looks attractive today, but one that remains economically sound tomorrow.

The analogy to simulation is no coincidence: just as a digital twin makes assumptions verifiable, TCO makes investment decisions verifiable. In both cases, the point is not to decide on the basis of plausibility, but on the basis of evidence.

The decisive shift

Anyone who views logistics projects purely through a CAPEX lens is making decisions on incomplete data. TCO is not an end in itself, nor an academic exercise. It's the framework that prevents seemingly low-cost decisions from becoming expensive ones in operation.

The purchase price of a system is the beginning of the cost story – not its end. Investment decisions should therefore not rest on CAPEX alone, but on what a logistics solution actually costs over ten or fifteen years. Only then does economic viability become truly comparable. And only then do investment decisions become what they should be: informed.