Activity Based Management (Process) Reporting
Activity Based Management (ABM) is a method of identifying and evaluating activities that a business performs using Activity Based Costing to carry out a Value Chain Analysis or a Re-engineering initiative to improve strategic and operational decisions in an organization. Activity Based Costing establishes relationships between overhead costs and activities so that overhead costs can be more precisely allocated to products, services, or customer segments. Activity Based Management focuses on managing activities and processes to reduce costs and improve customer value.
In a business organization, Activity Based Costing (ABC) is a method of allocating costs to products and services. It is generally used as a tool for planning and control. This is a necessary tool for doing Value Chain Analysis.
ABM (Process) Information Supports:
- Operational and Strategic Modeling, and Forecasting / Planning capabilities
- Product, Customer, and Channel detailed costs and profitability
- Process and Activity costs (focused on critical processes)
- Supports analysis, alternative assessment and decision making
- Supports Value analysis, and Business Process Re-engineering (BPR)
Identifies Cost of Processes / Activities performed throughout the company:
- Focuses attention on high cost, high value activities
- Quantifies the benefits from eliminating low value added activities
Develops Total Costing for a single Unit of Output
- Understanding this relationship provides better insight into cost behaviour
- Identifies the most important Cost Drivers for possible use in Performance Measurement Systems
Provides Total Cost of Products, Customers and Channels
- Leads to more meaningful Profitability analysis
- Provides tools to assess alternatives such as:
- Pricing of Products & Services
- Sales and Marketing promotions
Thejes Consultants have the following Activity Based Costing / Management systems development and implementation experience:
- Implemented Activity Based Costing at AT&T Canada, and provided detailed activity costs and value analysis to support Business Process Transformation efforts.
- $1.5 Million project using a phased approach to developing and implementing a corporate Performance Measurement and Reporting System (PMRS) at AT&T Canada. Led a complex sub-project to create an innovative costing model working with a leading edge specialist, to assign network assets and operating costs to AT&T Canada products.