Activity-Based Management (ABM) uses detailed economic analyses of important business activities to improve strategic and operational decisions. ABM increases the accuracy of cost information by more precisely linking overhead and other indirect costs to products or customer segments. Traditional accounting systems distribute indirect costs using bases such as direct labor hours, machine hours, or materiel dollars. ABM tracks overhead and other indirect costs by activity, which can then be traced to products or customers.
Balanced Scorecard defines what management means by “performance” and measures whether management is achieving desired results. The Balanced Scorecard translates mission and vision statements into a comprehensive set of objectives and performance measures that can be quantified and appraised. These measures typically include: financial, customer value, internal business process, learning and growth, and employee performance.
Cycle Time Reduction decreases the time it takes a company or program to perform key activities throughout its value chain. Cycle Time Reduction uses analytic techniques to minimize waiting time, eliminate activities that do not add value, increase parallel processes, and speed up decision processes within an organization. Time-based strategies often emphasize flexible manufacturing, rapid response, and innovation in order to attract the most profitable customers.
Groupware refers to a broad range of technologies that allow people in organizations to work together through computer networks. These products range from sophisticated electronic mail packages to applications that link offices and employees. Organizations use such technology-aided communications to better inform strategic and financial decisions and to more effectively and economically bring together working groups. (DAU has a Groupware capability in its Management Decision Center, which is used for management decision making by offices and agencies throughout DoD.)
Outsourcing occurs when a company or government agency uses third parties to perform non-core business activities. Contracting third parties enables a company or agency to focus its efforts on its core competencies. Many companies find that outsourcing reduces cost and improves performance of the activity. Third parties that specialize in an activity are likely to be lower cost and more effective, given their scale. Through outsourcing, a company or agency can access the state of the art in all of its business activities without having to master each one internally.
Business Process Reengineering involves the fundamental redesign of core business processes to achieve significant improvements in productivity, cycle times, and quality. In Business Process Reengineering, companies start with a blank sheet of paper and rethink existing processes to deliver more value to the customer. They typically adopt a new value system that places increased emphasis on customer needs. Companies and/or government agencies reduce organizational layers and eliminate unproductive activities in two key areas: First, they redesign functional organizations into cross-functional teams. Second, they use technology to improve data dissemination and decision making.
Strategic Planning is a comprehensive process for determining what a commercial business or government agency should become and how it can best achieve that goal. It appraises the full potential of a business and explicitly links the business objectives to the actions and resources required to achieve them. Strategic Planning offers a systematic process to ask and answer the most critical questions confronting a management team — especially large, irrevocable resource commitment questions.
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