Total Cost of Ownership for Product-Service System: Application of a Prototypal Model to Aluminum Melting Furnaces

The well-established Total Cost of Ownership (TCO) concept can support the development or assessment of Product-Service Systems (PSS), since it adopts a lifecycle perspective, therefore enabling a “whole cost” evaluation, that may lead to eco-efficient choices by customers. This paper explores an application of the TCO concept to aluminum melting furnaces, a specific example of highly energy-intensive equipment.A TCO model is created, validated and tested through 8 case studies of small- and medium-sized aluminum die casting producers located in Lombardy. Empirical findings of the analyses carried out through the model suggest the main determinants of furnaces TCO and possible levers to reduce costs of such equipment. On average, operating costs of an aluminum melting furnace, such as materials, labor and energy, combine for about 95% of the furnace TCO. Based on current operational modalities, the studied companies incur costs ranging from about 127 to 400 Euros per ton of molten aluminum, due to furnaces ownership and utilization. This evaluation leads to identify actions to reduce such costs (e.g. through energy-efficient furnaces, scale economies by installing centralized, large-sized furnaces) and ideas for the development of use or result-oriented PSS types.