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Managing Finance

  Activity Based Management

What is Activity Based Management (ABM)?

ABM is the process of  ' ... focusing on the management of activities to improve the value received by the customer and the profit achieved by providing this value'

From: CAM-I Glossary of Activity Based Management.

How can Activity Based Management benefit the business?

As mentioned in the CAM-I definition of ABM, it provides understanding of how the cost of activities undertaken by all people impacts the customer and the business profit. The tool allows the business to answer fundamental questions such as:

• Which products and customers are most / least profitable?

• What activities can be eliminate or reduced without impacting the product or service?

• Where can additional internal investment produce the greatest return?

How we can help?

The process of implementing an Activity Based Management approach involves:

• Implement an Activity Based Costing (ABC) process

  • Identify activities

  • Allocate costs to activities

  • Identify products / services

  • Link activity, and hence cost,  to products / services

• Link the ABC process to re-engineering, performance management, and benchmarking activities

ABM affects everyone in the organization so MEC Services Ltd can:

• Provide awareness and training in ABC / ABM techniques

• Identify and implement a suitable ABC system

• Assist your team in implementing the ABC process

• Map processes

• Help you link ABC to other management initiatives

• Help in the change management process associated with new initiatives

We have experience in implementing an ABC system at a medium sized tour operator in the UK travel industry.