ABM in Manufacturing: A Case Study of a Gas Turbine Manufacturer

Two years previously the Company had ambitious plans. Production capability was enhanced, it re-organised into high-tech machine cells, a number of new markets were opened up and a partnership deal with a third-party seller gained access to some lucrative new business opportunities. Unfortunately, as the global recession began to bite, its competitors proved much nimbler, and the order book became perilously weak. The business decided that its response would be to 'double the business' within 2 years. An end to the crisis came with the realisation that inadequate cost information was the root cause of many of their problems. To understand the costs of process failure and to get a firm grip on product costs and profitability, the company embarked on an Activity Based Management (ABM) project