INTRODUCTION

The Chartered Institute of Management Accountants (CIMA) has stated that an activitybased management (ABM) is a process of using information from activity-based costing to
analyze activities, cost drivers and performance so that customer value and profitability are
improved.
ABM also subsequently defined by CAM-I(Consortium for Advanced ManufacturingInternational) as a discipline that focuses on the management of activities as the route to
improving the value received by the customer and the profit achieved by providing this value.
ABM includes cost driver analysis, activity analysis, and performance measurement, drawing
on ABC as its major source of data. Using ABC data, ABM focuses on how to redirect and
improve the use of resources to increase the value created for customers and other
stakeholders.
In point of fact, we can see that activity-based management is actually a method of
identifying and evaluating activities executed by a business using activity-based costing to
carry out a value chain analysis or a re-engineering initiative to improve strategic and
operational decisions in an organization. While ABC establishes relationships between
overhead costs and activities so that overhead costs can be more precisely allocated to
products, services or customer segments, ABM in the other hand focuses on managing
activities to reduce costs and improve customer value.
COMPANY BACKGROUND
The IBM Corporation is today one of the world's largest and leading IT companies.
Worldwide, IBM operates in some 170 countries and employs more than 390,000 people.
In Malaysia, IBM was first established in June 1961 and since then, has played a major role
in delivering solutions to all types of Malaysian businesses. The company's key strengths are
its skilled and experienced IT personnel, and its worldwide infrastructure of international
offices and laboratories. IBM Malaysia is a wholly-owned onshore subsidiary of IBM World
Trade Corporation.
Over the decades, IBM Malaysia has contributed and will continue to contribute towards
assisting Malaysia achieve her vision and goals. The company will continue to introduce
state-of-the-art technologies to the marketplace, thus enabling local companies to compete
effectively both locally and globally.
In IBM Malaysia, there are a few thousand employees of diverse backgrounds and talents
serving in professional and support function roles, including regional positions. IBM Malaysia
is committed to playing a major role in cultivating the use and development of IT in Malaysia,
a mission that mirrors the Government's objective of making the country a regional and
global hub of knowledge-based industries. The company is also heavily involved in
developing local capability through a string of alliances. Its Business Partners represent IBM
in almost all the country's industry segments. Together, IBM and its Business Partners deliver
open, integrated, end-to-end solutions that help clients innovate for competitive advantage.
IBM is that partner with more than 90 years of leadership in helping businesses globally to
innovate and be smarter.

APPROACH
Through a set of analysis and design workshops, involving both finance and operational
stakeholders, we were able to tackle following topics:

Definition of all the operational processes, tasks and flows, and a harmonization and
mapping across all 4 sites of the ELC, where possible

Definition of activity dictionary; reconciliation and classification of activities and

performance metrics; definition of practical capacity based on theoretical capacity

Implementation of a conceptual Time Driven Activity Based Management model (TDABM) in IBM Cognos TM1

Integration of the TD-ABM model with different warehouse management systems, to

obtain key inputs and actual figures

Change management and support in the transition towards a new model and
potentially new approaches and ways of working
OUTCOME
Through the implementation of IBM Cognos TM1 as supporting technology, replacing the set
of de-centralized and overengineered Excel-files, the outcome of this project was a
centralized Warehouse Performance Management system, with:

Access to all involved stakeholders (finance and operations), with specific

responsibilities and access rights depending on the profile

An automated derivation of area and warehouse productivity and associated costs,

based on the input of key performance indicators, volume estimations and general
parameters

A detailed comparison between actual and budgeted / forecasted productivity and

cost, to monitor and dynamically adjust where needed

A set of Excel-based web-templates & -reports facilitating the input of key drivers and
parameters, and the analysis of the performance at different angles of the model