Your browser (Internet Explorer 6) is out of date. It has known security flaws and may not display all features of this and other websites. Learn how to update your browser.

Business Process optimization and ABC costing

What is the role of the finance team in contributing to business process optimization?

Corporations are always aiming to optimize and streamline most of their processes for the purpose of increasing efficiency, reducing costs, and improving overall quality.

The question here is how to measure the savings from optimization?
A solid finance team can play a vital role in process optimization by implementing a costing method called Activity Based Costing ABC. This method is very helpful in determining how much each activity or process is costing the company. It is the basis of measuring cost savings for each optimization scenario suggested. Management can then focus on the areas where it can generate the highest savings while maintaining or even increasing the quality delivered to its customers.
The ABC costing method is an important tool not only for process optimization measurement, but also a powerful tool that supports decision making in the company. It reflects the financial impact of any decision to be made in the company.