Are you already bored with Activity Based Costing? Have you run out of useful ideas for your activity accounting database? Here are some ideas that may get you out of your rut and back on the road to continuous improvement.
- Hold monthly ABM Show & Tell staff meetings. Select employees each month to discuss their activity procedures, output and cost performance. Feature new and previously enacted continuous improvement action plans each meeting. Celebrate the results!
- Use departmental ABM reports during annual employee performance reviews. Discuss which activities they would like to do more of (value) and which they would like to do less of (non-value).
- Print an ABC Bill of Activity for your most profitable product and least profitable product. Give copies to Marketing, Design Engineering or your R&D team. Show them how to read and use an existing product’s Bill of Activity to predict the cost of new products.
- Review your Top 10 most expensive Value-Added activities report. Select one to benchmark with a company outside your industry. Call ICMS for candidates.
- Name a process manager and process improvement team for one or more of your ABM business processes. Ask the process team to select one activity output from their process to measure daily. Chart this Key Performance Indicator on a greaseboard in a highly visible location.
- Review the Top 10 most expensive activities and Top 5 most expensive business processes during your annual strategic planning meeting. Do the activities and processes support the strategy or mission statement of the organization? Which of the activities or processes are your organizations core competencies? You’ll be surprised with the discussion and findings.
- Create an ABC Bill of Activity for a typical sales transaction for one of your most important customers. Hold a meeting with the customer. Use the report as a common language to discuss and define methods to mutually lower the cost of every sales transaction and split the savings.
- Link your ABM database to an Economic Value Analysis (EVA) model. Using a DuPont Model return on investment flowchart, identify specific activities and business processes that could significantly improve your EVA calculation.
- Review the most frequently produced ABM/ABC reports with a cross section of general management and employees. Ask them if they understand and use the reports. Use their constructive criticism to improve your ABM reports.
- Send a copy of one your departmental Activity Accounting reports to ICMS. We’ll quickly respond with a FREE benchmarking analysis.
If this article has inspired you and your organization to cut costs this year, call us at 817-475-2945, or e-mail your needs to firstname.lastname@example.org.