Activity-Based Management (ABM)
Candlefocus EditorABM is built on the premise that an organization’s activities are the drivers of its costs and performance. By analysing these activities, ABM is able to identify unnecessary or less productive activities that could be improved or eliminated to improve efficiency and productivity.
At its core, ABM applies the principles of Activity-Based Costing to the managerial decision-making process. Cost information gathered from ABC is used to identify which activities are the most expensive and therefore have the most potential for improvement. Armed with this information, managers are better equipped to make informed decisions that reduce costs while improving performance.
One of the top benefits to leveraging ABM is its ability to help organizations make strategic decisions based on activities and data instead of emotions. By focusing on analyzing data and assessing processes, managers are able to make decisions without distractions or biases.
ABM also provides organizations with an effective way to track performance against required benchmarks. Using ABM, managers can assess the effectiveness of an activity in terms of costs, timelines, and customer satisfaction. By doing so, managers can quickly identify which activities are worth keeping and which need to be eliminated or improved.
Finally, ABM helps organizations better manage their resources by reducing waste and freeing up resources for other activities. By identifying unnecessary activities and inefficient processes, ABM can help organizations save cost and ensure funds and personnel are properly allocated.
In today’s competitive business environment, Activity-Based Management is a must-have strategy to ensure an organization’s success. By gathering data and using the insights from Activity-Based Costing, ABM helps organizations make better-informed decisions, eliminate wasteful practices, reduce costs, and improve efficiency.