Bangkok--Jul 27--SOFT IT
Activity-Based Costing/Management (ABC/M) was developed by two professors at Harvard, Robin Cooper and Robert Kaplan, as a practical tool to solve problems faced by most organizations around the globe. Most major corporate found two obstacles in their strategic plan and their day-to-day decision making eventhough all the information may be available on their hand. Two especially important failings are:
1. Their inability to track individual product costs to a reasonable level of accuracy and validity of cost information.
2. Their inability to provide useful feedback to management for the purpose of operational control and strategic decision-making.
As a result, managements of companies selling multiple products and especially services are making important decisions about pricing, product mix, customer, and process technology based on inaccurate, inappropriate, invalid cost information regardless of how sophisticate the technology like Data Warehousing, Supply Chain Management, or Customer Relationship Management the organization have invested.
ABC can be extremely valuable to an organization, because it provides information on the range, cost and consumption of operating activities. Specific benefits of, and strategic uses for, this information are:
More accurate product costs enable better strategic decisions regarding:
-Product pricing.
-Product mix.
-Make versus buy.
-Investments in R&D, process automation, promotion, etc.
-Increased visibility of the activities performed (because ABC maps the activities and traces costs to them) enables a company to:
-Focus more on the management of activities, such as improving the efficiency of high cost activities.
-Identify and reduce non-value added activities. End.
-AN-