What is the difference between Activity-Based Management (ABM) and Activity-Based Costing?

Activity-based management (ABM) is a method of identifying and evaluating activities that a business performs 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. Activity-based costing establishes relationships between overhead costs and activities so that overhead costs can be more precisely allocated to products, services, or customer segments. Activity-based management focuses on managing activities to reduce costs and improve customer value. (This is from Wikipedia, and i totally agree with the explanation)

Activity Based Management (ABM) and Activity Based Costing(ABC) are inter-related methodologies.  ABC provides the strategic information you need to make informed management decisions. ABM is the real time monitoring of the tactical activities you undertake to deliver those strategic decisions. 

This is why ABM is displayed as an extension of the ABC model in the diagram below. The horizontal axis of the Turney Cross# represents the business process view. The vertical dimension (Resources, Activities and Cost Objects) represents Activity Based Costing (ABC).  When the second dimension is added (made up of Cost Drivers and Performance Measurement), the result is Activity Based Management.

In simple words "Activity Based Management" is "Activity Based Costing" in action.

Management gains a thorough understanding of its business processes and cost behaviour during the ABC analysis process; and management applies the insights gained during ABC fact gathering and analysis to improve decision making at both operating and strategic levels. 

Agreed with the answer Ednalyn Banuelos

Activity-Based Management (ABM) linked with functions of Management and Activity-Based Costing linked with Cost of the Product.

agree with mr  Ednalyn Banuelos

thank you 

Agreed with adnalyn and wikipedia

 Activity-based management focuses on managing activities to reduce costs and improve customer value.

 ABM is about “doing things right”, using ABC information to improve efficiency.

The ABC is the system that generates the information for ABM.

Both are are inter-related methodologies.  ABC provides strategic information for management decisions while ABM is monitoring of the tactical activities in real time environment to deal and derive for strategic decisions. 

Thank you for your question, first of all it`s a tricky question :) because the ABM is an extension of the ABC and not easy to recognize the different anyhow i will tell you when the ABC and ABM are inter-related is based on the company activities. and the different are that the ABM used the cost drivers to enhance the performance measures while the ABC use the resources to produce the cost object. so the ABM Mainly focus on the business process so it helps in reducing the cost drivers but the ABC helps improving the cost by highlighting them e.i salaries     

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