Life Cycle Cost Analysis (LCCA) Policy

This policy outlines the guidelines for conducting Life Cycle Cost Analysis (LCCA) for all hardware assemblies sourced from multiple manufacturers. SmartSort’s goal is to ensure cost-effective decision-making throughout the product’s life cycle, from procurement to disposal.

This policy applies to all hardware assembly projects within the company, including procurement, production, maintenance, and end-of-life management.

Each SmartSort system is assembled to operate for three to five years. At the end of each product’s life cycle, a full recovery plan is established with the customer, so products which may continue to operate can be used accordingly, and those requiring end-of-life treatment, will be handled correctly.

Policy:

1. Data Collection and Analysis:
• SmartSort gathers comprehensive data on initial costs, including purchase price, transportation, and installation.
• We then estimate operating costs, such as energy consumption, routine maintenance, and repairs.
• Finally, we estimate end-of-life costs, including disposal, recycling, and decommissioning.
2. Cost Categories:
• Acquisition Costs: Depending on which purchasing journey each customer engages with, we contract an initial costs of procurement and installation.
1. Traditional Subscription: The customer purchases the hardware assets and subscribes to the software.
2. Hybrid Subscription: The customer leases the hardware and subscribes to the software.
3. Full Subscription: The customer subscribes to the Hardware-as-a-Service offering.
• Operational Costs: Ongoing expenses related to operation, maintenance, and utilities.
• End-of-Life Costs: Costs associated with disposal, recycling, or repurposing.
3. Evaluation Criteria:
• Assess total cost of ownership (TCO) over the product’s expected life span.
• Consider environmental impact and sustainability in cost calculations.
• Compare alternative solutions to determine the most cost-effective option.
4. Decision-Making Process:
• SmartSort integrates LCCA findings into the procurement and project planning processes.
• SmartSort ensures that all stakeholders are informed of the analysis results and their implications.
• SmartSort makes decisions based on a balance of cost, performance, and sustainability.
5. Documentation and Reporting:
• SmartSort maintains detailed records of all LCCA calculations and assumptions for each electronic device used in its Intelligent Processing Unit (IPU).
• Regularly reviews and updates LCCA policy and procedures periodically to reflect changes in technology, market conditions, and regulatory requirements.

Responsibilities:

• The Finance and Procurement departments are responsible for conducting LCCA and ensuring compliance with this policy.
• Project managers and engineers must provide accurate data and collaborate in the LCCA process.

Review and Updates:

• This policy will be reviewed annually and updated as necessary to reflect changes in company practices and industry standards.