Which term refers to the long-term evaluation of cost efficiency over a product’s lifecycle?

The term that refers to the long-term evaluation of cost efficiency over a product's lifecycle is life-cycle costing. This methodology considers all costs associated with a product from inception to disposal, encompassing design, production, operation, and end-of-life phases. By evaluating costs throughout the entire lifecycle, organizations can make more informed financial decisions, assess the total cost of ownership, and identify opportunities for cost savings and improved sustainability.

Life-cycle costing is especially crucial in procurement and supply chain management as it aligns with ethical considerations, focusing not just on the initial purchase price but also on the environmental and economic impacts of a product over time. This holistic view enables companies to assess the long-term value and implications of their purchasing decisions, ultimately leading to better resource allocation and more sustainable practices.

While cost accounting involves tracking and analyzing costs, it does not inherently consider the product's entire lifecycle. Return on investment (ROI) measures the profitability and efficiency of an investment but also does not specifically encompass all lifecycle costs. Expense management focuses on controlling and reducing expenses within a set period, lacking the broader perspective of long-term cost analysis associated with a product's lifecycle.