CRG's Cost Management and Profitability Analytics solutions provide management with the insights that are required to determine what aspects of the business are under performing, and provide the building blocks for improving the long term economic profitability of your business.
Our solutions incorporate an Activity Based methodology and provide performance analytics at the activity and process level as well as analytics on profitability or cost recovery across products, services, customers, channels, business units and divisions. CRG's Cost Management and Profitability Analytics solutions are supported by our Cost Allocator and FlexABM tool sets.
The Foundation for Product Costing, Strategic Pricing and Profit Planning
Introduced in the 1980s, Activity-Based Costing/Management (ABC/M) has spread from its manufacturing roots, and is widely deployed across a wide range of businesses, regardless of industry and sector. From financial services and telecommunications to technology firms and government agencies, ABC/M provides the tools to transform your organization into a process-driven, profitability-based business.
Understanding True Profitability
Through better information of product and client profitability, ABC/M improves decision-making to:
- better allocate and focus of scarce resources
- understand and improve enterprise-wide processes
- break through silos
- align costs to products and services, increasing cost visibility and manageability
- shift to results-based reporting
- understand and act on Shared Services costs and performance
It is the foundation for better understanding the "true" profitability of products and services, and identifying improvement initiatives. By matching costs more closely with the activities and processes that trigger them, you will have the power to effectively manage costs, improve process, positively impact profitability and enhance decision-making.
Why is it Important?
ABC/M is ideal for multiple product/service, multiple client organizations who are suffering from incorrect costing information. Traditional cost allocation methods allocate overheads by arbitrary allocations of indirect costs which are often wrong. ABC/M minimizes these distortions in your costing.
Unlike traditional allocation methods which cannot be linked tied to specific outputs, ABC/M helps identify indirect costs and identifies pockets of process efficiencies. It makes you more competitive by measuring product and client profitability with higher accuracy and helping determine the cost-effectiveness of activities and processes.
ABC/M is for Organizations of all Sizes, Industries and Sectors
Contrary to popular belief, ABC/M is not just for the Fortune 1000, as its principles and effects are the same for smaller organizations. It provides a clear metrics for improvement, and encourages management teams of all sizes to discover opportunities to improve their business process effectiveness.
By helping managers identify their value-added activities - those that will best accomplish a mission, deliver a service or meet a customer demand - ABC/M improves decision-making with better information and eliminates waste by encouraging employees to look at all costs. The essential part of any ABC/M endeavor is to get a clear picture of the activities and processes the entire organization performs. When employees understand the activities they perform, they can then better understand the costs involved. |
