Introduction. The management models valid until the first years of the 1970s are already totally out of date, however the paradigms associated with the old driving models are so strong that even today they survive totally or partially in most companies., with the exception of those classified as "world class" for their levels of excellence.
There is something important to be clarified, although most companies are determined to continue with the old paradigms, even if only partially, they are not the companies of the past. These have already died due to their lack of competitiveness, new companies have emerged, but in their way of managing the old-fashioned ways of managing production and marketing survive, and everything that revolves around it.
There is a new message and it is very clear: “in the 21st century, the winners will be those who remain at the head of the curve of change, constantly redefining their industries, creating new markets, opening new paths, reinventing competition rules and questioning permanently the status quo ”.
Definition
Activity Based Management is a management system based on planning, improving and controlling the activities of an organization to meet external requirements and customer expectations.
On the one hand, we have to underline the critical importance of managing activities and processes, as opposed to managing resources and functions. Secondly, the importance of meeting and satisfying both the specifications resulting from the market study, as well as covering, and even exceeding, the expectations of customers, consumers and users is made clear. A third element is the continuous improvement of both products and services, as well as processes and activities, in order to systematically and constantly overcome the various levels of performance.
The objective is to align activities and processes in such a way as to generate the greatest added value for customers and consumers, making the most efficient use of resources, for which a continuous process of improvement is put into practice.
With the ABM, the organization achieves results with fewer resources; that is, the organization can achieve the same results with a lower total cost. ABM achieves such results by implementing an operational and a strategic approach.
The operational approach is intended to improve the performance of activities through a more efficient use of resources, while the strategic approach focuses on concentrating resources on those activities that generate added value. It follows something that is essential, "it is not enough to make activities and processes more efficient and effective, but first we must define very well what should be the activities and processes to be optimized".
Fundamental principles
Twelve are the essential principles that give strength and life to the ABM system, being they:
Resources should not be managed, but activities. In other words: "you must manage what is done and not what is spent."
Have a database for statistical analysis, monitoring of evolution and control of results.
Implement horizontal accounting, activity-based costing and ABC budgeting systems.
Make use of the Administration Based on Objectives, complementing it with the use of the Balanced Scorecard.
The activities to be carried out are based on the needs, requirements and expectations of the clients, and not on the objectives set internally. This is a way of thinking from "outside to inside". The staff is there to satisfy the requirements of the consumers and not to satisfy the requirements of their bosses.
Promote organizational flattening and greater empowerment.
Concentrate resources and capabilities in the fundamental and strategic activities and processes for the organization's progress. Derive in third parties those activities that allow generating a greater final added value for customers and consumers.
The management of activities and not functions tends to eliminate the "barriers" that prevent and limit the generation of value.
Non-value generating activities must be systematically eliminated. But even more important than eliminating them is preventing their appearance through prevention and / or early detection.
Establish a system that ensures the generation of products and services according to the specifications "the first time".
Generate the participation, and in this way the commitment, of all the members of the organization.
Promote ethics and work discipline leading to continuous improvement in the processes, activities, products and services of the company.
Make the most productive use of each resource
Resources are destined or consumed by activities, therefore it is critical that such activities make beneficial use of them. This implies, in the first place, determining what activities are necessary to develop the organizational processes, and based on this, making such activities more efficient and effective, making use of the necessary and appropriate resources. A sub or over use of resources should be avoided, as well as avoiding incurring the use of resources in prices, qualities and quantities higher than those actually necessary.
Align activities according to objectives and deadlines
The best way to achieve the alignment of the activities is by using the Balanced Scorecard. The objectives of each activity and process must not only be interrelated, but also not conflict or have opposite objectives, something that must also occur between the short, medium and long-term objectives.
ABM / ABC as a driver of process reengineering
Through the better knowledge of the activities and their respective costs, thanks to the implementation of the ABM and the ABC, changes and modifications in the processes can be faced and must be reduced in order to reduce costs, improve customer service, reduce time processing, shorten response times, and increase the profitability of the company. These changes in the processes are made by reengineering them.
Conclusions
Anyone who is already familiar with the new and diverse management systems currently in vogue can check the clear convergence of all of them in aspects such as continuous improvement, focus on activities and processes, permanent monitoring through various tools, greater use of applied statistics, teamwork and systematic elimination of various types of waste.
This convergence is what has given rise to what we can now call Competitive Management (CM ©) as opposed to Traditional Management. How quickly and well an organization moves from one management system to another must be the results it will achieve.
In an increasingly “flat” world, companies that optimize their activities and processes, and better interrelate with global processes (virtual companies), must excel and prosper.
In a world where companies from different countries and continents contribute to the generation of true and authentic global products, quality brought to a level of measurement of parts per million, with deliveries in predetermined quantity and times, at a competitive cost, and with the ease of generating variety is critical.
The ABM constitutes a high impact work and management methodology when it comes to generating a lean production.
Bibliography
Cost and Effect - Robert Kaplan and Robin Cooper - Editorial Gestión 2000 - 1999
Activity Based Costing - Mauricio Lefcovich - www.sht.com.ar - 2006
