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Activity Based Management (ABM) is a discipline that
focuses on the management of activities as a way to improve customer value
and profit. ABM includes cost driver analysis, activity analysis, and
performance measurement.
The
Basics of Activity Based Management
The battle to sustain and increase corporate profitability grows ever
more arduous in most sectors of the economy. Margins are caught in a pincer
movement by, on the one hand, the steady improvement in competition, and
on the other, the increasing awareness of customers. We need to grasp
every opportunity not only to be ever more effective at what we do, but
also to be truly competitive, winning more market share of the customers
both nationally and globally. For success, a full understanding of costs
and cost structures is necessary. Conventional accounting and management
reporting throw little light on the real cost dynamics in a business.
As a result we are not in control of profitability at a level of detail
that supports substantive decision-making...
Develin &
Partners
The
Basic Principles of Building ABM Models
When starting to build ABM models there are a number of things to consider
before plunging into the detail. As always, some thought and planning
at an early stage will prevent a path being taken that leads to an inefficient
model or one that does not answer the business issues ABM was hoping to
address. When structuring a model there are a number of key points to
consider...
Develin &
Partners
Undertaking
an ABM Project
Embarking on an ABM project is not a trivial exercise. Like any project
that has to make a significant impact on business performance it will
require dedicated resources, the co-operation of the business to become
involved in the task of data collection, and the determination of the
top team to use the results to improve the organisation’s fortunes...
Develin &
Partners
Jargon review - glossary
of Activity Based Management terms
Bamboozled by ABM terms and Acronyms? Get all the answers with the Activity
Based Management Jargon Review...
Develin &
Partners
Activity
Based Management - Merging Process and Measurement
Increasing competition, both globally and locally, make it clear that
businesses know accurately and understand the source of process, product
and service costs within their organization. Activity Based Costing (ABC),
with its focus on deconstructing overhead pools and assigning costs to
products and services in a more meaningful manner, has been a giant leap
forward from traditional costing models where a high percentage of cost
is arbitrarily allocated to products.
However, ABC models often look at cost from a financial point of view,
making sure only that all costs are assigned to some product accounting
"box" without a thorough understanding of the business process
that underlies and defines the resource utilization that creates the cost.
This paper will describe a methodology that combines business process
analysis with ABC to create a tool that translates Activity Based Costing
into Activity Based Management (ABM), a methodology for running, improving
and measuring a business...
| Further reading |
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Activity-based
Cost Management: Making It Work: A Manager's Guide to Implementing
and Sustaining an Effective ABC System
Gary Cokins |
This
work describes the benefits of activity-based costing and how to
implement it. It shows how to avoid implementation failure and how
to sustain the activity-based costing and management system. The
unification of time, cost and quality is illustrated, and the text
shows how to trace the flow of costs from resources to final cost
objectives. Jargon-free explanations and illustrations are provided,
making the text a useful learning tool for managers and an internal
selling tool for ABC advocates.
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UK |
Buy
US |
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Activity Based
Management: Improving Processes and Profitability
Brian Plowman |
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Product
and particularly customer profitability are black holes in most
managers' understanding of their business. Identifying customer
revenue is easy but identifying what they cost - so we can understand
whether or not they are profitable - is difficult. In a world in
which competition, regulation and the increasing use of the Internet
put ever greater pressure on margins it is vitally important to
understand both product- and customer-profitability. Activity Based
Management (ABM) enables you to do this.
This book explains the power of using ABM to increase
the profitability of your business. It provides step-by-step guidance
on basic principles, comparisons between traditional methods, definitions
of processes, activities and cost-drivers as well as details of
data collection techniques and implementation steps. Through the
book's numerous detailed examples a logical picture builds up of
how to obtain the benefits that ABM can deliver. On its own ABM
will change management decision-making: by showing how ABM also
supports other profit improvement initiatives such as Business Process
Reengineering, Shareholder Value Added and Customer Relationship
Management, managers will learn how they can use the best possible
toolkit to put their business firmly on the road to leaps in profitability.
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UK |
Buy
US |
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Links
The
Activity Based Management Authority - Better Management.Com
BetterManagement.com aggregates content from over 200 leading organizations
including Harvard Business School Working Knowledge, The McKinsey Quarterly,
and University of Pennsylvania’s Knowledge@Wharton. This extensive
library is organized into “Authorities.” one of which handily
is Activity Based Management...
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