Exactly how does ABC/M focus efforts on increasing efficiency and quality delivery of products/services?
ABC is a cost management tool designed to provide insight into the real costs of an organization – its activities (the work that it performs) and its outputs (products and services). ABM takes the ABC data and adds another dimension of information, providing insight into why the work of an organization is done (cost drivers) and how well the work is done (performance measures). Managers typically manage activities not resources. By understanding what an organization does one can begin to challenge whether the organization is doing the right thing. Typically departments or programs are organized vertically. Activities that contribute to a process function horizontally – any department of the organization can perform cross-functional activities. By measuring performance, an organization will continually improve activity costs, quality and response time. By sharing this information across the organization employees can understand and act upon efforts to continually improve their activitie
