Activity Based Costing KPI
KPI Name: Activity Based Costing Balanced Scorecard Metrics
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Description by authors:
Organizations that adopt the practice of ‘lowering the costs incurred in processes’ rather than opting for the ‘revenue generating methodologies’ will be following what is commonly known as Activity based costing (ABC). However, the changed thought asks for a ‘measurable’ and ‘quantitative’ method to keep an eye on the proceedings. The various directions that offer help in this regard are- ‘Cost driver Analysis’, ‘Internal Operations’, ‘Employees experience and Learning’ and ‘Performance’.
Cost Drivers can be analyzed using KPIs like ‘types of cost drivers’, ‘cost driver identification index’, ‘cost driver effectiveness ratio’ and ‘cost drivers creating non-required activities’.
Internal operations can be obtained using Parameters like ‘types of resource drivers’, ‘rework costs’, ‘Technological barriers to ABC implementation: Total Barriers’ and ‘Unit Cost variation’.
Employee experience and learning Perspective can be attained with metrics such as ‘Number of Training Sessions held’, ‘Employee participation Level’, ‘Experience enhancement ratio’ and ‘Workforce Alignment Index’.
Lastly, Performance Perspective can be had with metrics like ‘Rise in -successful decisions- ratio’, ‘% drop in -wastage- managed’, ‘-Best Practices- adoption rise’ and ‘Average Time decline’.
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