7. 21.10.11-t. zielinski-processes or costs
TRANSCRIPT
1All rights reserved - ABC Akademia Sp. z o.o. All rights reserved - ABC Akademia Sp. z o.o.
Profit Management Profit Management System®System®
Processes or Costs? Processes or Costs? – That is the question– That is the question
Tomasz M. ZielińskiTomasz M. ZielińskiPresident of the boardPresident of the board, ABC Akademia Sp. z o.o., ABC Akademia Sp. z o.o.
2All rights reserved - ABC Akademia Sp. z o.o. All rights reserved - ABC Akademia Sp. z o.o.
Profit Management Profit Management System®System®
„„DiscoveringDiscovering profitsprofits””
ABC AkademiaABC Akademia– is a producer of – is a producer of Profit Management System®Profit Management System® ABC/RCAABC/RCA software and a leader in software and a leader in implementation of ABC/implementation of ABC/RCARCA systemssystems for costs and profit managementfor costs and profit management in in PolandPoland
3All rights reserved - ABC Akademia Sp. z o.o. All rights reserved - ABC Akademia Sp. z o.o.
Profit Management Profit Management System®System®
Tomasz M. ZielińskiTomasz M. Zieliński
• President of the board inPresident of the board in ABC AKADEMIA Sp. z o.o. ABC AKADEMIA Sp. z o.o., specializing in , specializing in ABC/RCA softwareABC/RCA software. .
• The manager and coordinator of implementation projects on The manager and coordinator of implementation projects on management accounting, ABC/management accounting, ABC/RCARCA, business intelligence., business intelligence.
• UUniversity lecturer of management accounting at well known polish niversity lecturer of management accounting at well known polish universities of economics. universities of economics.
• He is an author of the book „Revealing the truth of profits: theory and He is an author of the book „Revealing the truth of profits: theory and practice of ABC/M systems". practice of ABC/M systems".
• He also wrote many articles in controlling, logistics and business journals. He also wrote many articles in controlling, logistics and business journals.
4All rights reserved - ABC Akademia Sp. z o.o. All rights reserved - ABC Akademia Sp. z o.o.
Profit Management Profit Management System®System®
Profit Management System® Profit Management System® ABC/RCA software by ABC AkademiaABC/RCA software by ABC Akademia
• Profit Management SystemProfit Management System®® software software – advanced ABC/– advanced ABC/RCARCA class class solution for enterprise cost and profitability management.solution for enterprise cost and profitability management.
• Profit Management SystemProfit Management System®® can be integrated with ERP systems can be integrated with ERP systems and databases from most well known providers: SAP, Microsoft, and databases from most well known providers: SAP, Microsoft, OracleOracle as well as other systems running on almost any databases.as well as other systems running on almost any databases.
• Through the Partner Through the Partner ProgramProgram, ABC Akademia ensures , ABC Akademia ensures accessibility of accessibility of ABC/RCAABC/RCA software for all branches. software for all branches.
5All rights reserved - ABC Akademia Sp. z o.o. All rights reserved - ABC Akademia Sp. z o.o.
Profit Management Profit Management System®System®
AgendaAgenda
• Processes or Costs? – That is the question Processes or Costs? – That is the question
• The 12 -level Costing Continuum Maturity Model The 12 -level Costing Continuum Maturity Model (IFAC)(IFAC)
• Cost and effect costing - modelCost and effect costing - model
• Lessons from the battlefield – process based costing Lessons from the battlefield – process based costing implementation experience and challengesimplementation experience and challenges
• SummarySummary
6All rights reserved - ABC Akademia Sp. z o.o. All rights reserved - ABC Akademia Sp. z o.o.
Profit Management Profit Management System®System®
Cost view of organizationCost view of organization
Mindset shift – Process view of costsMindset shift – Process view of costsCustomer Service exampleCustomer Service example
Cost Center: Customer Service CostsSalaries 6 939 862 €
Fringe benefits 1 999 215 €
Materials 1 840 583 €
Rents 1 048 180 €
Leasing 945 166 €
Depreciation and amortization 811 172 €
Other costs 270 320 €
External services 102 907 €
Total 13 957 404 €
7All rights reserved - ABC Akademia Sp. z o.o. All rights reserved - ABC Akademia Sp. z o.o.
Profit Management Profit Management System®System®
Mindset shift – Process view of costsMindset shift – Process view of costsCustomer Service exampleCustomer Service example
Process view of Process view of organizationorganization
Cost Center: Customer Service: Proces / działanie CostsProcessing electronic orders 3 434 017 €Telemarketing - picking orders 2 527 149 €Preparing offers and quotes 1 724 364 €Processing paper orders 1 590 619 €Answering customers questions 1 477 954 €Invoicing 1 217 673 €Reserve inventory and delivery date 1 001 759 €Delivery planning 400 322 €Handling customers claims 305 343 €Reporting sales 278 204 €
Process 13 957 404 €
8All rights reserved - ABC Akademia Sp. z o.o. All rights reserved - ABC Akademia Sp. z o.o.
Profit Management Profit Management System®System®
Cost Center: Customer Service: Proces / działanie CostsProcessing electronic orders 3 434 017 €Telemarketing - picking orders 2 527 149 €Preparing offers and quotes 1 724 364 €Processing paper orders 1 590 619 €Answering customers questions 1 477 954 €Invoicing 1 217 673 €Reserve inventory and delivery date 1 001 759 €Delivery planning 400 322 €Handling customers claims 305 343 €Reporting sales 278 204 €
Process 13 957 404 €
Cost Center: Customer Service CostsSalaries 6 939 862 €
Fringe benefits 1 999 215 €
Materials 1 840 583 €
Rents 1 048 180 €
Leasing 945 166 €
Depreciation and amortization 811 172 €
Other costs 270 320 €
External services 102 907 €
Total 13 957 404 €
Cost view of organizationCost view of organization
Mindset shift – Process view of costsMindset shift – Process view of costsCustomer Service exampleCustomer Service example
Process view of Process view of organizationorganization
9All rights reserved - ABC Akademia Sp. z o.o. All rights reserved - ABC Akademia Sp. z o.o.
Profit Management Profit Management System®System®
Activities CostsPreparing offers 1 840 EUR Visiting customers 12 800 EUR Processing orders 1 360 EUR Bonus and promotions 3 920 EUR Picking orders 5 880 EUR Packaging orders 1 840 EUR Loading trucks 1 720 EUR Preparing transport documentation 1 400 EUR Transport to customer 19 560 EUR Invoicing 2 280 EUR
Process 52 600 EUR
Customer A
Costs by type CostsDepreciation 1 100 EUR Materials 4 350 EUR Energy and media 250 EUR Salaries 22 900 EUR Fringe benefits 5 600 EUR External services 17 350 EUR Taxes 650 EUR Other costs 400 EUR
Total 52 600 EUR
Customer A
FRUTTO S.A. Producer of beverages
Cost view of organizationCost view of organization
Mindset shift – Process view of costsMindset shift – Process view of costsCustomer exampleCustomer example
Process view of Process view of organizationorganization
10All rights reserved - ABC Akademia Sp. z o.o. All rights reserved - ABC Akademia Sp. z o.o.
Profit Management Profit Management System®System®
Activities CostsPreparing offers 1 840 EUR Visiting customers 12 800 EUR Processing orders 1 360 EUR Bonus and promotions 3 920 EUR Picking orders 5 880 EUR Packaging orders 1 840 EUR Loading trucks 1 720 EUR Preparing transport documentation 1 400 EUR Transport to customer 19 560 EUR Invoicing 2 280 EUR
Process 52 600 EUR
Customer A
Costs by type CostsDepreciation 1 100 EUR Materials 4 350 EUR Energy and media 250 EUR Salaries 22 900 EUR Fringe benefits 5 600 EUR External services 17 350 EUR Taxes 650 EUR Other costs 400 EUR
Total 52 600 EUR
Customer A
FRUTTO S.A. Producer of beverages
Cost view of organizationCost view of organization
Mindset shift – Process view of costsMindset shift – Process view of costsCustomer exampleCustomer example
Process view of Process view of organizationorganization
11All rights reserved - ABC Akademia Sp. z o.o. All rights reserved - ABC Akademia Sp. z o.o.
Profit Management Profit Management System®System®
Activities CostsDesigning 8 900 EUR Production planning 5 700 EUR Machine set ups 17 800 EUR Stabilizing of production process 24 700 EUR Producing (pressing, painting, heating) 43 800 EUR Packaging products 6 450 EUR Quality control 6 700 EUR Moving pallets to warehouse 3 650 EUR
Process 117 700 EUR
Product no 121Costs by type Costs
Depreciation 9 800 EUR Materials 35 800 EUR Energy and media 18 000 EUR Salaries 25 600 EUR Fringe benefits 5 500 EUR External services 7 900 EUR Taxes 5 300 EUR Other costs 9 800 EUR
Total 117 700 EUR
Product no 121
KERAMIK S.A. Producer of ceramics
Cost view of organizationCost view of organization
Mindset shift – Process view of costsMindset shift – Process view of costsProductProduct example example
Process view of Process view of organizationorganization
12All rights reserved - ABC Akademia Sp. z o.o. All rights reserved - ABC Akademia Sp. z o.o.
Profit Management Profit Management System®System®
Activities CostsDesigning 8 900 EUR Production planning 5 700 EUR Machine set ups 17 800 EUR Stabilizing of production process 24 700 EUR Producing (pressing, painting, heating) 43 800 EUR Packaging products 6 450 EUR Quality control 6 700 EUR Moving pallets to warehouse 3 650 EUR
Process 117 700 EUR
Product no 121Costs by type Costs
Depreciation 9 800 EUR Materials 35 800 EUR Energy and media 18 000 EUR Salaries 25 600 EUR Fringe benefits 5 500 EUR External services 7 900 EUR Taxes 5 300 EUR Other costs 9 800 EUR
Total 117 700 EUR
Product no 121
KERAMIK S.A. Producer of ceramics
Cost view of organizationCost view of organization
Mindset shift – Process view of costsMindset shift – Process view of costsProductProduct example example
Process view of Process view of organizationorganization
13All rights reserved - ABC Akademia Sp. z o.o. All rights reserved - ABC Akademia Sp. z o.o.
Profit Management Profit Management System®System®
Processes or Costs? Processes or Costs? – That is the question– That is the question
• The way we report The way we report (we see) (we see) costscosts,, really matters! really matters!
• The process view of organization automatically focus managers The process view of organization automatically focus managers on improvement and optimization. Cost view of organization on improvement and optimization. Cost view of organization focuses managers on cutting costs.focuses managers on cutting costs.
• We manage activities, not costs. It’s making activities that We manage activities, not costs. It’s making activities that cause costs.cause costs.
• Activities are natural for people. The process view of company Activities are natural for people. The process view of company is better understood by the whole organizationis better understood by the whole organization..
• Process view of organization is focused on future. Cost view of Process view of organization is focused on future. Cost view of organization is focused on reducing resources, instead of organization is focused on reducing resources, instead of improvement and optimization.improvement and optimization.
14All rights reserved - ABC Akademia Sp. z o.o. All rights reserved - ABC Akademia Sp. z o.o.
Profit Management Profit Management System®System®
AgendaAgenda
• Processes or Costs? – That is the question Processes or Costs? – That is the question
• The 12 -level Costing Continuum Maturity Model The 12 -level Costing Continuum Maturity Model (IFAC)(IFAC)
• Cost and effect costing - modelCost and effect costing - model
• Lessons from the battlefield – process based costing Lessons from the battlefield – process based costing implementation experience and challengesimplementation experience and challenges
• SummarySummary
15All rights reserved - ABC Akademia Sp. z o.o. All rights reserved - ABC Akademia Sp. z o.o.
Profit Management Profit Management System®System®
12 Costing Levels Continuum12 Costing Levels ContinuumMaturity ModelMaturity Model
• IFAC is the global organization for the accountancy IFAC is the global organization for the accountancy profession. profession.
• It works with its 164 members and associates in It works with its 164 members and associates in 125 countries and jurisdictions to protect the public 125 countries and jurisdictions to protect the public interest by encouraging high quality practices by interest by encouraging high quality practices by the world's accountants. the world's accountants.
• IFAC members and associates, which are primarily IFAC members and associates, which are primarily national professional accountancy bodies, national professional accountancy bodies, represent 2.5 million accountants employed in represent 2.5 million accountants employed in public practice, industry and commerce, public practice, industry and commerce, government, and academia.government, and academia.
12
34
5
7
1011
6
8
12
9
Costing Continuum // Levels of Maturity
LevelLevel ##
EXPENSE TRACKING, COST REPORTINGand CONSUMPTIONS RATES
DEMAND DRIVEN PLANNING with CAPACITY SENSITIVITY
Blind
ProcessVisibillity
OutputVisibillity
ImprovedOutput
Information/ Approximate
Accuracy
ImprovedTreatmentof Indeirect
Costs
CustomerDemandSensitive
UnusedCapacityAware
PullActivity-based
ResourcePlanning
Time-driven
ABC
ResourceConsumptionAccounting
Simulation
bookkeeping
process & leanaccounting
Direct costs who(3) and with (4) support costs to output groups
Standard costing to individualoutputs;
Project accl; Job order costing
Push Activity-based costing (ABC); Productcosts
Level 6 withChannel & customerprofitabilityReporting;
Cost to serve
Unusedcapacitycosts(estimeled)
(ABRP); Forecastdriver quantities X unit consumptionrates;
Driver basedbudgeting
(TDABC); Forecastdriver quantities X timeconsumtionrates;
Direct costfocus;
Repetivitiveworkconditions
RCA: Level 9 withproportionalcosting atdirect andsupport depts.
Unlimate inconsumtionrates
Copyright Copyright ©©JulyJuly 2009 by 2009 by thetheInternationalInternational FederationFederation ofof AccountantsAccountants (IFAC).(IFAC).
12
34
5
7
1011
6
8
12
9
Costing Continuum // Levels of Maturity
LevelLevel ##
EXPENSE TRACKING, COST REPORTINGand CONSUMPTIONS RATES
DEMAND DRIVEN PLANNING with CAPACITY SENSITIVITY
Blind
ProcessVisibillity
OutputVisibillity
ImprovedOutput
Information/ Approximate
Accuracy
ImprovedTreatmentof Indeirect
Costs
CustomerDemandSensitive
UnusedCapacityAware
PullActivity-based
ResourcePlanning
Time-driven
ABC
ResourceConsumptionAccounting
Simulation
bookkeeping
process & leanaccounting
Direct costs who(3) and with (4) support costs to output groups
Standard costing to individualoutputs;
Project accl; Job order costing
Push Activity-based costing (ABC); Productcosts
Level 6 withChannel & customerprofitabilityReporting;
Cost to serve
Unusedcapacitycosts(estimeled)
(ABRP); Forecastdriver quantities X unit consumptionrates;
Driver basedbudgeting
(TDABC); Forecastdriver quantities X timeconsumtionrates;
Direct costfocus;
Repetivitiveworkconditions
RCA: Level 9 withproportionalcosting atdirect andsupport depts.
Unlimate inconsumtionrates
Copyright Copyright ©©JulyJuly 2009 by 2009 by thetheInternationalInternational FederationFederation ofof AccountantsAccountants (IFAC).(IFAC).
16All rights reserved - ABC Akademia Sp. z o.o. All rights reserved - ABC Akademia Sp. z o.o.
Profit Management Profit Management System®System®
Self-assessment and strategySelf-assessment and strategy
• The 12-level Costing Continuum The 12-level Costing Continuum Maturity Model can be used Maturity Model can be used as a self-assessment tool to as a self-assessment tool to help an organization:help an organization:
– determine the level of company’s actual costing system, and determine the level of company’s actual costing system, and – decide what higher level it might justify aspiring to.decide what higher level it might justify aspiring to.
12
34
5
7
1011
6
8
12
9
Costing Continuum // Levels of Maturity
LevelLevel ##
EXPENSE TRACKING, COST REPORTINGand CONSUMPTIONS RATES
DEMAND DRIVEN PLANNING with CAPACITY SENSITIVITY
Blind
ProcessVisibillity
OutputVisibillity
ImprovedOutput
Information/ Approximate
Accuracy
ImprovedTreatmentof Indeirect
Costs
CustomerDemandSensitive
UnusedCapacityAware
PullActivity-based
ResourcePlanning
Time-driven
ABC
ResourceConsumptionAccounting
Simulation
bookkeeping
process & leanaccounting
Direct costs who(3) and with (4) support costs to output groups
Standard costing to individualoutputs;
Project accl; Job order costing
Push Activity-based costing (ABC); Productcosts
Level 6 withChannel & customerprofitabilityReporting;
Cost to serve
Unusedcapacitycosts(estimeled)
(ABRP); Forecastdriver quantities X unit consumptionrates;
Driver basedbudgeting
(TDABC); Forecastdriver quantities X timeconsumtionrates;
Direct costfocus;
Repetivitiveworkconditions
RCA: Level 9 withproportionalcosting atdirect andsupport depts.
Unlimate inconsumtionrates
Copyright Copyright ©©JulyJuly 2009 by 2009 by thetheInternationalInternational FederationFederation ofof AccountantsAccountants (IFAC).(IFAC).
12
34
5
7
1011
6
8
12
9
Costing Continuum // Levels of Maturity
LevelLevel ##
EXPENSE TRACKING, COST REPORTINGand CONSUMPTIONS RATES
DEMAND DRIVEN PLANNING with CAPACITY SENSITIVITY
Blind
ProcessVisibillity
OutputVisibillity
ImprovedOutput
Information/ Approximate
Accuracy
ImprovedTreatmentof Indeirect
Costs
CustomerDemandSensitive
UnusedCapacityAware
PullActivity-based
ResourcePlanning
Time-driven
ABC
ResourceConsumptionAccounting
Simulation
bookkeeping
process & leanaccounting
Direct costs who(3) and with (4) support costs to output groups
Standard costing to individualoutputs;
Project accl; Job order costing
Push Activity-based costing (ABC); Productcosts
Level 6 withChannel & customerprofitabilityReporting;
Cost to serve
Unusedcapacitycosts(estimeled)
(ABRP); Forecastdriver quantities X unit consumptionrates;
Driver basedbudgeting
(TDABC); Forecastdriver quantities X timeconsumtionrates;
Direct costfocus;
Repetivitiveworkconditions
RCA: Level 9 withproportionalcosting atdirect andsupport depts.
Unlimate inconsumtionrates
Copyright Copyright ©©JulyJuly 2009 by 2009 by thetheInternationalInternational FederationFederation ofof AccountantsAccountants (IFAC).(IFAC).
17All rights reserved - ABC Akademia Sp. z o.o. All rights reserved - ABC Akademia Sp. z o.o.
Profit Management Profit Management System®System®
12
34
5
7
1011
6
8
12
9
Costing Continuum // Levels of Maturity
Level #Level #
EXPENSE TRACKING, COST REPORTING and CONSUMPTIONS RATES
DEMAND DRIVEN PLANNING with CAPACITY SENSITIVITY
Blind
Process Visibillity
Output Visibillity
Improved Output
Information/ Approximate
Accuracy
Improved Treatment of Indeirect
Costs
Customer Demand Sensitive
Unused Capacity Aware
Pull Activity-based
Resource Planning
Time-driven
ABC
Resource Consumption Accounting
Simulation
bookkeeping
process & lean accounting
Direct costs who (3) and with (4) support costs to output groups
Standard costing to individual outputs;
Project accl; Job order costing
Push Activity-based costing (ABC); Product costs
Level 6 with Channel & customer profitability Reporting;
Cost to serve
Unused capacity costs (estimeled)
Push RCA Resource Consump-tion Accounting
(ABRP); Forecast driver quantities X unit consumption rates;
Driver based budgeting
GPK Grenzplan-kosten-rechnung
(TDABC); Forecast driver quantities X time consumtion rates;
Direct cost focus;
Repetivitive work conditions
RCA: Level 9 with proportional costing at direct and support depts.
Unlimate in consumtion rates
Copyright © July 2009 by the Copyright © July 2009 by the International Federation of Accountants (IFAC).International Federation of Accountants (IFAC).
18All rights reserved - ABC Akademia Sp. z o.o. All rights reserved - ABC Akademia Sp. z o.o.
Profit Management Profit Management System®System®
12
34
5
7
1011
6
8
12
9
Costing Continuum // Levels of Maturity
Blind
Process Visibillity
Output Visibillity
Improved Output
Information/ Approximate
Accuracy
Improved Treatment of Indeirect
Costs
Customer Demand Sensitive
Unused Capacity Aware
Pull Activity-based
Resource Planning
Time-driven
ABC
Resource Consumption Accounting
Simulation
bookkeeping
process & lean accounting
Direct costs who (3) and with (4) support costs to output groups
Standard costing to individual outputs;
Project accl; Job order costing
Push Activity-based costing (ABC); Product costs
Level 6 with Channel & customer profitability Reporting;
Cost to serve
Unused capacity costs (estimeled)
Push RCA Resource Consump-tion Accounting
(ABRP); Forecast driver quantities X unit consumption rates;
Driver based budgeting
GPK Grenzplan-kosten-rechnung
(TDABC); Forecast driver quantities X time consumtion rates;
Direct cost focus;
Repetivitive work conditions
RCA: Level 9 with proportional costing at direct and support depts.
Unlimate in consumtion rates
Copyright © July 2009 by the Copyright © July 2009 by the International Federation of Accountants (IFAC).International Federation of Accountants (IFAC).
Source: Research by Source: Research by ABC Akademia Sp. z o.o. 2011ABC Akademia Sp. z o.o. 2011
11%
1%
11%
16%
47%
1%
7% 7%
0% 0% 0% 0%0%
5%
10%
15%
20%
25%
30%
35%
40%
45%
50%
POLAND 2011POLAND 2011
19All rights reserved - ABC Akademia Sp. z o.o. All rights reserved - ABC Akademia Sp. z o.o.
Profit Management Profit Management System®System®
AgendaAgenda
• Processes or Costs? – That is the question Processes or Costs? – That is the question
• The 12 -level Costing Continuum Maturity Model The 12 -level Costing Continuum Maturity Model (IFAC)(IFAC)
• Cost and effect costing - modelCost and effect costing - model
• Lessons from the battlefield – process based costing Lessons from the battlefield – process based costing implementation experience and challengesimplementation experience and challenges
• SummarySummary
20All rights reserved - ABC Akademia Sp. z o.o. All rights reserved - ABC Akademia Sp. z o.o.
Profit Management Profit Management System®System®
„„Vacuum cleaningVacuum cleaning””activity costingactivity costing
21All rights reserved - ABC Akademia Sp. z o.o. All rights reserved - ABC Akademia Sp. z o.o.
Profit Management Profit Management System®System®
Set-upSet-upProduction lineProduction line
Set-upSet-upProduction lineProduction line Pressing, heating, Pressing, heating,
assembly, packagingassembly, packaging
Pressing, heating, Pressing, heating, assembly, packagingassembly, packaging
Schedule Schedule productionproduction
Schedule Schedule productionproduction
Quality controlQuality controlQuality controlQuality control
Picking ordersPicking ordersPicking ordersPicking orders
Processing ordersProcessing ordersProcessing ordersProcessing orders
TransportationTransportationTransportationTransportation
Visiting customersVisiting customersVisiting customersVisiting customers
[1][1]
[2][2]
Production Production line 3line 3ForkliftForklift
truckstrucks
Sales Sales represenat.represenat.ElectricityElectricity
ITITsystemsystem
Office Office spacespace
Customer Customer service staffservice staff
Production Production planning staffplanning staff
Warehouse Warehouse buildingbuilding
Production Production line 1line 1
TransportTransportProduction Production
line 2line 2
Production Production maintenance maintenance
staffstaff
RESOURCES RESOURCES COSTINGCOSTING
ACTIVITIESACTIVITIESCOSTINGCOSTING
PRODUCTS AND PRODUCTS AND CUSTOMERS CUSTOMERS
COSTING COSTING
PRODUCT PROFITABILITYPRODUCT PROFITABILITY CUSTOMER PROFITABILITYCUSTOMER PROFITABILITY
[5][5] [5][5]
[6][6][1][1]
[2][2]
Repairing Repairing Repairing Repairing Cleaning officeCleaning officeCleaning officeCleaning office
[4][4]
[4][4][4][4]
[4][4]
[4][4]Product Product SegmentSegment
ProductProductBrandBrand
Customer Customer SegmentSegment
CustomerCustomerRegionRegion
Cause and Cause and effect costingeffect costing
IResource Resource pools / pools / cost cost centerscenters
22All rights reserved - ABC Akademia Sp. z o.o. All rights reserved - ABC Akademia Sp. z o.o.
Profit Management Profit Management System®System®Cause and Cause and effect costingeffect costing
IIResource Resource costingcosting Set-upSet-up
Production lineProduction line
Set-upSet-upProduction lineProduction line Pressing, heating, Pressing, heating,
assembly, packagingassembly, packaging
Pressing, heating, Pressing, heating, assembly, packagingassembly, packaging
Schedule Schedule productionproduction
Schedule Schedule productionproduction
Quality controlQuality controlQuality controlQuality control
Picking ordersPicking ordersPicking ordersPicking orders
Processing ordersProcessing ordersProcessing ordersProcessing orders
TransportationTransportationTransportationTransportation
Visiting customersVisiting customersVisiting customersVisiting customers
[1][1]
[2][2]
Production Production line 3line 3ForkliftForklift
truckstrucks
Sales Sales represenat.represenat.ElectricityElectricity
ITITsystemsystem
Office Office spacespace
Customer Customer service staffservice staff
Production Production planning staffplanning staff
Warehouse Warehouse buildingbuilding
Production Production line 1line 1
TransportTransportProduction Production
line 2line 2
Production Production maintenance maintenance
staffstaff
RESOURCES RESOURCES COSTINGCOSTING
ACTIVITIESACTIVITIESCOSTINGCOSTING
PRODUCTS AND PRODUCTS AND CUSTOMERS CUSTOMERS
COSTING COSTING
PRODUCT PROFITABILITYPRODUCT PROFITABILITY CUSTOMER PROFITABILITYCUSTOMER PROFITABILITY
[5][5] [5][5]
[6][6][1][1]
[2][2]
Repairing Repairing Repairing Repairing Cleaning officeCleaning officeCleaning officeCleaning office
[4][4]
[4][4][4][4]
[4][4]
[4][4]Product Product SegmentSegment
ProductProductBrandBrand
Customer Customer SegmentSegment
CustomerCustomerRegionRegion
23All rights reserved - ABC Akademia Sp. z o.o. All rights reserved - ABC Akademia Sp. z o.o.
Profit Management Profit Management System®System®Cause and Cause and effect costingeffect costing
IIIActivity Activity costingcosting Set-upSet-up
Production lineProduction line
Set-upSet-upProduction lineProduction line Pressing, heating, Pressing, heating,
assembly, packagingassembly, packaging
Pressing, heating, Pressing, heating, assembly, packagingassembly, packaging
Schedule Schedule productionproduction
Schedule Schedule productionproduction
Quality controlQuality controlQuality controlQuality control
Picking ordersPicking ordersPicking ordersPicking orders
Processing ordersProcessing ordersProcessing ordersProcessing orders
TransportationTransportationTransportationTransportation
Visiting customersVisiting customersVisiting customersVisiting customers
[1][1]
[2][2]
Production Production line 3line 3ForkliftForklift
truckstrucks
Sales Sales represenat.represenat.ElectricityElectricity
ITITsystemsystem
Office Office spacespace
Customer Customer service staffservice staff
Production Production planning staffplanning staff
Warehouse Warehouse buildingbuilding
Production Production line 1line 1
TransportTransportProduction Production
line 2line 2
Production Production maintenance maintenance
staffstaff
RESOURCES RESOURCES COSTINGCOSTING
ACTIVITIESACTIVITIESCOSTINGCOSTING
PRODUCTS AND PRODUCTS AND CUSTOMERS CUSTOMERS
COSTING COSTING
PRODUCT PROFITABILITYPRODUCT PROFITABILITY CUSTOMER PROFITABILITYCUSTOMER PROFITABILITY
[5][5] [5][5]
[6][6][1][1]
[2][2]
Repairing Repairing Repairing Repairing Cleaning officeCleaning officeCleaning officeCleaning office
[4][4]
[4][4][4][4]
[4][4]
[4][4]Product Product SegmentSegment
ProductProductBrandBrand
Customer Customer SegmentSegment
CustomerCustomerRegionRegion
24All rights reserved - ABC Akademia Sp. z o.o. All rights reserved - ABC Akademia Sp. z o.o.
Profit Management Profit Management System®System®Cause and Cause and effect costingeffect costing
IVProduct / Product / Customer Customer costingcosting
Set-upSet-upProduction lineProduction line
Set-upSet-upProduction lineProduction line Pressing, heating, Pressing, heating,
assembly, packagingassembly, packaging
Pressing, heating, Pressing, heating, assembly, packagingassembly, packaging
Schedule Schedule productionproduction
Schedule Schedule productionproduction
Quality controlQuality controlQuality controlQuality control
Picking ordersPicking ordersPicking ordersPicking orders
Processing ordersProcessing ordersProcessing ordersProcessing orders
TransportationTransportationTransportationTransportation
Visiting customersVisiting customersVisiting customersVisiting customers
[1][1]
[2][2]
Production Production line 3line 3ForkliftForklift
truckstrucks
Sales Sales represenat.represenat.ElectricityElectricity
ITITsystemsystem
Office Office spacespace
Customer Customer service staffservice staff
Production Production planning staffplanning staff
Warehouse Warehouse buildingbuilding
Production Production line 1line 1
TransportTransportProduction Production
line 2line 2
Production Production maintenance maintenance
staffstaff
RESOURCES RESOURCES COSTINGCOSTING
ACTIVITIESACTIVITIESCOSTINGCOSTING
PRODUCTS AND PRODUCTS AND CUSTOMERS CUSTOMERS
COSTING COSTING
PRODUCT PROFITABILITYPRODUCT PROFITABILITY CUSTOMER PROFITABILITYCUSTOMER PROFITABILITY
[5][5] [5][5]
[6][6][1][1]
[2][2]
Repairing Repairing Repairing Repairing Cleaning officeCleaning officeCleaning officeCleaning office
[4][4]
[4][4][4][4]
[4][4]
[4][4]Product Product SegmentSegment
ProductProductBrandBrand
Customer Customer SegmentSegment
CustomerCustomerRegionRegion
25All rights reserved - ABC Akademia Sp. z o.o. All rights reserved - ABC Akademia Sp. z o.o.
Profit Management Profit Management System®System®Cause and Cause and effect costingeffect costing
VProduct / Product / Customer Customer full cost full cost costingcosting
Set-upSet-upProduction lineProduction line
Set-upSet-upProduction lineProduction line Pressing, heating, Pressing, heating,
assembly, packagingassembly, packaging
Pressing, heating, Pressing, heating, assembly, packagingassembly, packaging
Schedule Schedule productionproduction
Schedule Schedule productionproduction
Quality controlQuality controlQuality controlQuality control
Picking ordersPicking ordersPicking ordersPicking orders
Processing ordersProcessing ordersProcessing ordersProcessing orders
TransportationTransportationTransportationTransportation
Visiting customersVisiting customersVisiting customersVisiting customers
[1][1]
[2][2]
Production Production line 3line 3ForkliftForklift
truckstrucks
Sales Sales represenat.represenat.ElectricityElectricity
ITITsystemsystem
Office Office spacespace
Customer Customer service staffservice staff
Production Production planning staffplanning staff
Warehouse Warehouse buildingbuilding
Production Production line 1line 1
TransportTransportProduction Production
line 2line 2
Production Production maintenance maintenance
staffstaff
RESOURCES RESOURCES COSTINGCOSTING
ACTIVITIESACTIVITIESCOSTINGCOSTING
PRODUCTS AND PRODUCTS AND CUSTOMERS CUSTOMERS
COSTING COSTING
PRODUCT PROFITABILITYPRODUCT PROFITABILITY CUSTOMER PROFITABILITYCUSTOMER PROFITABILITY
[5][5] [5][5]
[6][6][1][1]
[2][2]
Repairing Repairing Repairing Repairing Cleaning officeCleaning officeCleaning officeCleaning office
[4][4]
[4][4][4][4]
[4][4]
[4][4]Product Product SegmentSegment
ProductProductBrandBrand
Customer Customer SegmentSegment
CustomerCustomerRegionRegion
26All rights reserved - ABC Akademia Sp. z o.o. All rights reserved - ABC Akademia Sp. z o.o.
Profit Management Profit Management System®System®Cause and Cause and effect costingeffect costing
I - VResource / Resource / Activity / Activity / Product / Product / Customer Customer costingcosting
Set-upSet-upProduction lineProduction line
Set-upSet-upProduction lineProduction line Pressing, heating, Pressing, heating,
assembly, packagingassembly, packaging
Pressing, heating, Pressing, heating, assembly, packagingassembly, packaging
Schedule Schedule productionproduction
Schedule Schedule productionproduction
Quality controlQuality controlQuality controlQuality control
Picking ordersPicking ordersPicking ordersPicking orders
Processing ordersProcessing ordersProcessing ordersProcessing orders
TransportationTransportationTransportationTransportation
Visiting customersVisiting customersVisiting customersVisiting customers
[1][1]
[2][2]
Production Production line 3line 3ForkliftForklift
truckstrucks
Sales Sales represenat.represenat.ElectricityElectricity
ITITsystemsystem
Office Office spacespace
Customer Customer service staffservice staff
Production Production planning staffplanning staff
Warehouse Warehouse buildingbuilding
Production Production line 1line 1
TransportTransportProduction Production
line 2line 2
Production Production maintenance maintenance
staffstaff
RESOURCES RESOURCES COSTINGCOSTING
ACTIVITIESACTIVITIESCOSTINGCOSTING
PRODUCTS AND PRODUCTS AND CUSTOMERS CUSTOMERS
COSTING COSTING
PRODUCT PROFITABILITYPRODUCT PROFITABILITY CUSTOMER PROFITABILITYCUSTOMER PROFITABILITY
[5][5] [5][5]
[6][6][1][1]
[2][2]
Repairing Repairing Repairing Repairing Cleaning officeCleaning officeCleaning officeCleaning office
[4][4]
[4][4][4][4]
[4][4]
[4][4]Product Product SegmentSegment
ProductProductBrandBrand
Customer Customer SegmentSegment
CustomerCustomerRegionRegion
27All rights reserved - ABC Akademia Sp. z o.o. All rights reserved - ABC Akademia Sp. z o.o.
Profit Management Profit Management System®System®
Cost and effect costingCost and effect costingrecommendationsrecommendations
• RCA / GPK – view of resourcesRCA / GPK – view of resources
• ABC/M – view of activitiesABC/M – view of activities
28All rights reserved - ABC Akademia Sp. z o.o. All rights reserved - ABC Akademia Sp. z o.o.
Profit Management Profit Management System®System®
AgendaAgenda
• Processes or Costs? – That is the question Processes or Costs? – That is the question
• The 12 -level Costing Continuum Maturity Model The 12 -level Costing Continuum Maturity Model (IFAC)(IFAC)
• Cost and effect costing - modelCost and effect costing - model
• Lessons from the battlefield – process based costing Lessons from the battlefield – process based costing implementation experience and challengesimplementation experience and challenges
• SummarySummary
29All rights reserved - ABC Akademia Sp. z o.o. All rights reserved - ABC Akademia Sp. z o.o.
Profit Management Profit Management System®System®
Why sometimes it fail?Why sometimes it fail?
• Insufficient training of general Insufficient training of general management and project teammanagement and project team members members
• Lack of interest of general managementLack of interest of general management
• Lack of the resources view of costs, that Lack of the resources view of costs, that cause the difficulties in activity costingcause the difficulties in activity costing
• Lack of costing functionalities in existing IT Lack of costing functionalities in existing IT systemssystems
30All rights reserved - ABC Akademia Sp. z o.o. All rights reserved - ABC Akademia Sp. z o.o.
Profit Management Profit Management System®System®
Key success factorsKey success factors
• Do everybody know what you are doing?Do everybody know what you are doing?
• Do extensive training and certificationDo extensive training and certification
• Start with RCA / GPK – resources view of costs, Start with RCA / GPK – resources view of costs,
– Define resource pools (cost centers in GL)Define resource pools (cost centers in GL)
• Then ABC – activities view of costsThen ABC – activities view of costs
– Define processes and activitiesDefine processes and activities
31All rights reserved - ABC Akademia Sp. z o.o. All rights reserved - ABC Akademia Sp. z o.o.
Profit Management Profit Management System®System®
AgendaAgenda
• Processes or Costs? – That is the question Processes or Costs? – That is the question
• The 12 -level Costing Continuum Maturity Model The 12 -level Costing Continuum Maturity Model (IFAC)(IFAC)
• Cost and effect costing - modelCost and effect costing - model
• Lessons from the battlefield – process based costing Lessons from the battlefield – process based costing implementation experience and challengesimplementation experience and challenges
• SummarySummary
32All rights reserved - ABC Akademia Sp. z o.o. All rights reserved - ABC Akademia Sp. z o.o.
Profit Management Profit Management System®System®
Thank You!!!Thank You!!!
Processes or Costs? Processes or Costs? – That is the question– That is the question
Tomasz M. ZielińskiTomasz M. ZielińskiPresident of the board, ABC Akademia Sp. z o.o.President of the board, ABC Akademia Sp. z o.o.