Support to Activity Based Management (ABM)
Strategic ABM
- Aiding in important decisions for improving product profitability by providing information on
- Repricing of products
- Substitution of products
- Redesigning of products
- Improving production processes
- Investing in flexible technology
- Elimination of unprofitable products
- Aiding in important decisions for improving customer profitability by providing information on
- Cost to serve a customer
- Cost of post sale services
- Cost to serve for distribution and retailing
- Repricing expensive services
- Retaining highly profitable customers
- Losing high cost-to- serve customers
- Aid in important decisions on supplier management and product development by providing information on
- Supplier / vendor sustaining costs
- Choosing low cost and not low price suppliers
- Product design and engineering
- Target costing
- What If analysis ( Simulation)
- New product cost estimation
Operational ABM
- What activities are being performed by the Organizations’ resources?
- How much does it cost to perform Organizational activities and business processes?
- Why does the Organization need to perform activities and business processes?
- How much of each activity is required for the Organization’s products, services and customers?
- Issues involved in identification, measurement, creation and management of capacity
- Develop the business case for operational improvement by classifying activity expenses by opportunities for cost improvement
- Prioritize cost improvement efforts to activities and processes where substantial cost improvement opportunities exist.
- Providing cost justification for cost improvement projects involving investment
- Providing information for tracking the benefits of the improvement plans
