Synopses & Reviews
In the classroom, ABC looks like a great way to manage a companys resources. But many executives who have tried to implement ABC on a large scale in their organizations have found the approach limiting and frustrating. Why? The employee surveys that companies used to estimate resources required for business activities proved too time-consuming, expensive, and irritating to employees.
This book shows you how to implement time-driven activity-based costing (TDABC), an easier and more powerful way to implement ABC. You can now estimate directly the resource demands imposed by each business transaction, product, or customer. The payoff? You spend less time and money obtaining and maintaining TDABC dataand more time addressing problems that TDABC reveals, such as inefficient processes, unprofitable products and customers, and excess capacity. The authors also show how to use TDABC to link strategic planning to operational budgeting, to enhance the due diligence process for mergers and acquisitions, and to support continuous improvement activities such as lean management and benchmarking.
In presenting their model, the authors define the two questions required to build TDABC:
1) How much does it cost per time unit to supply resource capacity for each business process?
2) How much resource capacity (time) is required to perform work for a companys many transactions, products, and customers?
The book demonstrates how to develop simple, valid answers to these two questions.
Kaplan and Anderson illustrate the TDABC approach with a wealth of case studies, in diverse settings, based on actual implementations.
In the classroom, activity-based costing (ABC) looks like a great way to manage a company's limited resources. But executives who have tried to implement ABC in their organizations on any significant scale have often abandoned the attempt in the face of rising costs and employee irritation. Time-Driven Activity-Based Costing is the solution to the problems associated with large-scale ABC implementation. In this book, Kaplan and Anderson offer a revised model where managers can estimate the resource demands imposed by each transaction, product, or customer, rather than rely on time-consuming and costly employee surveys. In their new model, Kaplan and Anderson focus on the two parameters managers need to estimate: how much it costs per time unit to supply resources to the business activities (the total overhead expenditure of a department divided by the total number of minutes of employee time available) and how much time it takes to carry out one unit of each kind of activity (as estimated or observed by the manager). Rather than endlessly updating and maintaining ABC data, this book with allow managers to spend their time addressing the deficiencies the model reveals: inefficient processes, unprofitable products and customers, and excess capacity.Kaplan and Anderson lead the discussion of Time-Driven ABC in the first seven chapters, followed by individual cases studies of actual implementations by Acorn consultants in diverse settings.
About the Author
Robert S. Kaplan, a co-creator of both Activity-Based Costing (ABC) and the Balanced Scorecard, is Baker Foundation Professor at Harvard Business School. Steven R. Anderson is the founder and chairman of Acorn Systems, a software and consulting firm headquartered in Houston, TX.