Delivering Activity Based Management
Departing from traditional accounting methods, Activity Based Management (ABM) utilises a process perspective to identify cost drivers directly related to those products, services, customers and departments which actually consume resources. Thus ABM allows organisations to utilise cost and operational information to support management decisions, and measure the “true” cost of making and delivering products and serving customers.
In a period of ever shorter product life-cycles, increasing pressure on profit margins, and a steady stream of new competitors, the use of a Performance Management (PM) approach, supported by ABM information, can provide an organisation with the competitive advantage necessary to thrive and grow. An integrated performance management approach, where information is treated as an asset, provides numerous benefits:
An ability to identify, enact and monitor improvement opportunities, which ensures an effective use of an organisation’s limited resources;
A proactive perspective, which seeks to identify long-term trends, problems, and opportunities, in a manner that allows for timely redirection of tactics; and
A focus which seeks to identify the underlying reasons behind performance results, not just the manifestation of their effects.