Allocating Fixed Costs Essay Example | Topics and Well Written Essays - 750 words

Allocating Fixed Costs - Essay Example Activity Based Management is basically the use of such ABC system towards improving strategic decisions and efficiency. It further uses the ABC information to choose between products and analyze the activities that need to be employed in order to get those products manufactured. The focus is mainly towards identifying using those activities which add value. DHL is one of the earliest implementer of the ABC and the ABM system. DHL is a German logistics company known for its expertise in providing international express mail services. It is considered to be a World market leader in providing such mail services both via sea and air. The company is also popular for its mailing services with respect to heavy weight goods delivery. DHL, in 1990s, applied the ABC and the ABM model to identify non-value activities because as it was experiencing falling margins. DHL discovered that the main cause of the de-escalating margins were mainly because of the product, destination and the customer mixes. Following the implementation of the ABC and the ABM technique, which helped the company understand the margins, DHL designed a new pricing strategy which was globally accredited and adopted by various companies (Hilton, 2007). Just-in-time (JIT) is a technique initially employed by the Japanese in order to gain efficiency within the production by minimizing the storage costs of the inventory needed for the production of the goods. The main benefit of implementing the JIT system is that it helps in reducing the costs of production for a company and hence a company gains huge margins by saving from the inventory costs that are not incurred. The basic feature of TQM is to prevent errors before they actually appear and avoid any wastage. Besides this, the focus is towards the continual improvement of the organization rather than just implementing the