Business Consultant
Consider all costs and expenses as resources. Displays the company as a set of activities and / or processes rather than a departmental hierarchy. It is a methodology that assigns costs to products or services based on consumption activities. at ranges. a The system of Activity Based Cost has gone through three generations and now finds himself in the fourth generation. Center For Responsible Lending shines more light on the discussion. a The first generation emphasized the notion of costs of products, its main output was to establish a system of cost estimates more correct. Entrecostes began to differentiate and add value to those who do not contribute. It was found that low-volume products were less profitable than those at high volume.
a The main focus of this first generation of abc headed use of resources, addressing implement JIT, continuous improvement system and philosophy of zero defects. a This new perspective helped identify the cost boosters outside the specified business unit, but even if I bring little help in the implementation of JIT, caused the appearance of the second generation . a In this generation could define the process, before identifying the activity linked to it, but will begin by identifying the activities. This system aims at identifying and implementing measures inducing activities. a It is at this stage that we can define SIGECA as a system of cost control efforts. Here firms can undertake many activities in support to add value to the product or service. a In the third generation of abc, we obtain information about the outside activities of each business unit, through the analysis of the value chain will need to add value to improve competitiveness in the activities preceding and following in order to gain greater customer value and sustainable competitive advantage.
Finally this fourth generation will be to link all activities between business units, creating an abc system that provides information for the company as a whole. Advantages. Allows the setting of fair and competitive prices. It facilitates the elimination of non-value adding activities (waste). Identify cost drivers. Emphasis on the key activities of the organization. Promotes continuous improvement and quality assurance as the planning and control process-oriented. It provides a better understanding of cost components less visible. Improving the usefulness of the budget to be formulated in relation to the resources required for activities instead of the global requirements of the functions. Enables the management based on activities. a impact. Businesses are looking to the future not only to predict but also to prevent itself from taking a wrong direction and that more and more organizations have become aware of their shortcomings. With the implementation of new systems, as the case of activity based costing system is behind the traditional costs, but this is a challenge as to the relevance in the implementation of this system, because with this change difficulties can arise both positive and negative order.