A great approach and process for Strategic Cost Management can be based on the Activity-Based Costing methodology.
The term 'Activity-Based Costing' has fallen victim to critical sentiment and I do agree with some of the criticism for certain implementations and approaches. However, thought-leaders and advanced practitioners have taken the basic approaches to completely new levels.
Examples are incorporating capacity management, cost of quality, or applying concepts to value-stream costing.
Even Robert S. Kaplan and Steven R. Anderson - 'fathers' of the original approach - have added the concept of 'Time-Driven Activity-Based Costing'. In reality, that kind of approach long existed before the paper on it was even written.
While the great fad might be over and many failed implementations seemed to have contributed to the bad reputation, there is a surprisingly high number of practitioners and applications of Activity-Based Costing in the business world today reaping the benefits and positioning their organizations more strongly than their competition.
In order to avoid misconceptions and preconceived notions, this blog utilizes the terms 'Strategic Costing' or 'Strategic Cost Management' to reflect advancements in Activity-Based Costing approaches.
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