Once the Impact Diagram is completed for a specific event, you must now transition from identifying the impact to measuring it. Simply put, this means taking the Primary TCO Components Impacted on the Impact Diagram and transfer them to the worksheets as the points to be measured. But the transition only starts step 3.

Each TCO Category has a different worksheet. Each worksheet requires different information to be gathered in order to document the impact the supplier has on the customer’s profits. It is critical that the right components be put into the right worksheet in order to measure it properly. If inventory reduction were to be measured using any other worksheet than the asset worksheet it would result in an incorrect estimate of the profit impact. For that reason, the Impact Diagram is a beneficial tool to utilize to help ensure the correct impact points are measured properly.

Each worksheet has several columns labeled with A – D. These columns are used to gather the specific information needed to determine the total cost impact. They were designed so that different types of information could be utilized in each of these columns. For example; column A on the asset worksheet (next page) which evaluates the quantities of the asset reduced, could be a physical count of the number reduced, 1 to represent a lot, or some percentage to indicate part of a lot. Users can also put formulas in each cell to help calculate the amount needed.

The last column has a formula for calculating the Total Cost impact based on these column headings. And when the totals from each worksheet are combined, it determines the total cost impact from that event.