Decision making improvement by effectively utilising activity-based costing and activity-based management tools

摘要

The aim of this study was to suggest ways to effectively utilise Activity-Based Costing and Activity-Based Managment within Eskom Transmission Southern Grid to improve decision making towards improved business and financial performance. The ultimate purpose was to assist managers and staff to implement ABC and ABM effectively for improved business and financial performance. The focus was on the following objective: To suggest ways to effectively utilise ABC & ABM within Eskom Transmission Southern Grid as to improve decision making and business financial performance. Given the selection of management tools available, instruments such as ABC and ABM are usually not implemented alone, but may be supported by one or more approaches. For this reason ABC and ABM are contrasted with several other popular instruments mentioned in the literature. The instruments are: • The value chain; • Continuous improvement; • The theory of constraints; and • Total quality management. Insight will be given to provide managers with more accurate information regarding maintenance for the Grid and tools in identifying critical bottlenecks. By applying the TOC, TQM and continuous improvement strategies, managers will be able to make improved decisions, leading to improved financial performance in the Eskom Transmission Southern Grid. iii The literature study revealed that ABC and ABM prove to be the cornerstone for informed decision making. Since organisations are highly dependent on quality information to make these informed decisions, ABC and ABM reorientate the organisation towards understanding and managing work processes thus impacting financial performance positively. ABC and ABM trace the cost of activities such as engineering and procurement to how maintenance benefits from these activities. The empirical study consisted of a structured questionnaire distributed to a sample population of engineers and managers in Eskom Transmission Southern Grid in Port Elizabeth. It was aimed at gathering information about the use of ABC and ABM within the Grid. Semi-structured interviews were also conducted with financial staff in the Grid and a focus group interview with engineering staff was done. The main findings of the empirical investigation revealed that management and staff lack insight into the use of ABC and ABM and how it can be integrated with existing improvement systems within the organisation. This study is concluded with a number of recommendations. These recommendations address the shortcomings and improvements that can be made to improve the utilisation of ABC and ABM within the organisation. The recommendations address the following: • Ensuring full commitment towards organisational goals and broadening the endorsement of ABC within the organisation; • Highlighting the importance of financial performance throughout the Grid; • Training of Managers, finance staff and engineers is required for proper execution of the ABC system; • Implementers need skills and know-how of the ABC and ABM system ensuring full utilisation; • The main cost drivers are identified, prioritised and efforts channelled into these activities; • Tools such as the Theory Of Constraints and Total Quality Management from the proposed model would assist the Grid in identifying the bottlenecks of a system correctly, thus know explicitly the amount of slack capacity of each activity available during a specific time period.