Browse Definitions :
Definition

activity-based management (ABM)

Contributor(s): Matthew Haughn

Activity-based management (ABM) is a management strategy in which business processes are evaluated and adjusted for their cost efficiency using activity-based costing.

ABM is used to evaluate business processes. If a business process loses the company money, it is examined to see if its efficiency can be increased or if the process can be eliminated. While it is most common in the enterprise, ABM is also used in non-profits, schools, government and non-government organizations (NGOs) as well.

ABM can be strategic or operational. Strategic ABM concerns itself with whether a company’s planned direction is right for efficiency. Operational ABM concerns itself with how the company processes operate.

All costs associated with a business process are first assessed in AMB. The costs assessed might include staffing, equipment, materials and distribution overhead. Once an accurate picture of costs is created, ABM considers how each cost might be reduced. For example, considerations may include if a task could be completed efficiently with fewer workers or if materials could be acquired for a lower price. When applied well and judiciously, ABM can not only improve business efficiency but also make budgeting more accurate.

One danger associated with ABM is the possibility of eliminating expenditures that affect efficiency but where effects are not directly measurable. Improvements in worker conditions, for example, have a measurable cost but, less directly, a measurable increase in productivity. In ABM, such costs may be eliminated and sometimes result in unexpected reductions in overall efficiency.

This was last updated in September 2017

Continue Reading About activity-based management (ABM)

Start the conversation

Send me notifications when other members comment.

Please create a username to comment.

-ADS BY GOOGLE

File Extensions and File Formats

Powered by:

SearchCompliance

  • compliance audit

    A compliance audit is a comprehensive review of an organization's adherence to regulatory guidelines.

  • regulatory compliance

    Regulatory compliance is an organization's adherence to laws, regulations, guidelines and specifications relevant to its business...

  • Whistleblower Protection Act

    The Whistleblower Protection Act of 1989 is a law that protects federal government employees in the United States from ...

SearchSecurity

  • RSA algorithm (Rivest-Shamir-Adleman)

    The RSA algorithm is the basis of a cryptosystem -- a suite of cryptographic algorithms that are used for specific security ...

  • remote access

    Remote access is the ability to access a computer or a network remotely through a network connection.

  • IP Spoofing

    IP spoofing is the crafting of Internet Protocol (IP) packets with a source IP address that has been modified to impersonate ...

SearchHealthIT

SearchDisasterRecovery

  • network disaster recovery plan

    A network disaster recovery plan is a set of procedures designed to prepare an organization to respond to an interruption of ...

  • virtual disaster recovery

    Virtual disaster recovery is a type of DR that typically involves replication and allows a user to fail over to virtualized ...

  • tabletop exercise (TTX)

    A tabletop exercise (TTX) is a disaster preparedness activity that takes participants through the process of dealing with a ...

SearchStorage

  • enterprise storage

    Enterprise storage is a centralized repository for business information that provides common data management, protection and data...

  • disk array

    A disk array, also called a storage array, is a data storage system used for block-based storage, file-based storage or object ...

  • optical storage

    Optical storage is any storage type in which data is written and read with a laser. Typically, data is written to optical media, ...

Close