Abm Management Essay

3391 Words 14 Pages

APRIL 2001


Activity-based Management – An Overview
IN THIS BRIEFING… ctivity-based management and activity-based costing (ABM/ABC) have brought about radical change in cost management systems. ABM has grown largely out of the work of the Texas-based Consortium for Advanced Manufacturing-International (CAM-I). No longer is ABM’s applicability limited to manufacturing organisations. The principles and philosophies of activity-based thinking apply equally to service companies, government agencies and process industries. The acronym itself has evolved from ABC to ABCM (activity-based cost management) to ABM, and the application of ABC evolved from a manufacturing product costing
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ABM is a fundamental shift in emphasis from traditional costing and performance measurement. People undertake activities which consume resources – so controlling activities allows you to control costs at their source. The real value and power of ABM comes from the knowledge and information that leads to better decisions and the leverage it provides to measure improvement. ABM enables management to make informed decisions about lines of business, product mix, process and product design, what services should be offered, capital investments, and pricing. ABM is more than an accounting tool; it's a system for continuous improvements. It is not a single answer but merely one of the many tools that can be used to enhance organisational performance management. ABM will not reduce costs, it will only help you understand costs better to know what to correct. The process of ABM does consume resources, and the manpower costs can be significant. Companies

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