Browse Definitions :
Definition

activity-based management (ABM)

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)

SearchCompliance
  • ISO 31000 Risk Management

    The ISO 31000 Risk Management framework is an international standard that provides businesses with guidelines and principles for ...

  • pure risk

    Pure risk refers to risks that are beyond human control and result in a loss or no loss with no possibility of financial gain.

  • risk reporting

    Risk reporting is a method of identifying risks tied to or potentially impacting an organization's business processes.

SearchSecurity
  • Pretty Good Privacy (PGP)

    Pretty Good Privacy or PGP was a popular program used to encrypt and decrypt email over the internet, as well as authenticate ...

  • email security

    Email security is the process of ensuring the availability, integrity and authenticity of email communications by protecting ...

  • Blowfish

    Blowfish is a variable-length, symmetric, 64-bit block cipher.

SearchHealthIT
SearchDisasterRecovery
  • What is risk mitigation?

    Risk mitigation is a strategy to prepare for and lessen the effects of threats faced by a business.

  • fault-tolerant

    Fault-tolerant technology is a capability of a computer system, electronic system or network to deliver uninterrupted service, ...

  • synchronous replication

    Synchronous replication is the process of copying data over a storage area network, local area network or wide area network so ...

SearchStorage
Close