Activity Based Management: Improving Processes and Profitability - Chapter 1, Introduction
- Tags:
- Activity-based Management,
- Better Management.com,
- Customer Profitability,
- Finance,
- Managerial Accounting,
- Marketing,
- Pricing
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- Better Management.com
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Overview: Customer profitability is a black hole in most managers' understanding of their business. Identifying customer revenue is easy: it's called the sales ledger. Identifying what individual customers cost - so one can understand whether or not they are profitable - is difficult. In a world in which competition, and often regulation, put increasing pressure on margins, it is vitally important to understand both product and customer profitability. As if competition were not enough to put pressure on margins, electronic commerce promises lower unit costs and creates customer expectations of lower prices. Activity Based Management (ABM) enables managers to understand product and customer profitability, the cost of business processes, and how to improve them.
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