Managing logistics activities in production networks with activity based management

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Managing logistics activities in production networks with activity based management

 

Author: Chu, Choi-ping Anna
Title: Managing logistics activities in production networks with activity based management
Degree: M.Sc.
Year: 2004
Subject: Hong Kong Polytechnic University -- Dissertations
Business logistics
Production management
Activity-based costing
Department: Dept. of Industrial and Systems Engineering
Pages: ix, 107, xii leaves : ill. ; 30 cm
Language: English
InnoPac Record: http://library.polyu.edu.hk/record=b1781149
URI: http://theses.lib.polyu.edu.hk/handle/200/2204
Abstract: The aims of this dissertation are to get to know why Activity-Based Management (ABM) has become more and more popular since the last two decades. At the same time, the logistics activities in extended enterprises have also been widely discussed and focused. What are the roles of ABM in managing logistics activities within extended enterprises? This dissertation will walk through the methodology of Activity Based Costing (ABC) and its application on a manufacturing company of Glory Moon Greeting Cards Ltd., with the focus on customer profitability. This case study provides an economic map of the company's logistics activities and profitability that is linked to specific major customers. With these valuable information and insights, the company is able to set its sale strategies for different types of customers in order to be effectively shifting some unprofitable type of customers to be more profitable ones. It evidences that a company can improve its overall profitability by effectively "doing the right things" through strategic ABM. Moreover, the writer has in-depth discussions how ABC provides the visibility of activity costs along an extended enterprise, especially places emphasis on the logistics activities. With these important valuable cost information, the collaborative partners are able to determine where re-engineering logistics processes, eliminating redundancies, or shifting functions among partners are necessary in order to achieve the costs efficiency, and to optimize the effectiveness of the entire extended enterprise. However, in reality, it is quite complicated to initiate an ABC system in a production network or supply chain. Particularly, several major obstacles are usually encountered such as conflicts with traditional organizational culture, staff resistance of changes, lacking of trust among collaborative partners and the complexity of uses and maintenances of ABC data. In the last part of this dissertation, the writer has demonstrated with another case study on Nassetti Thai Co. Ltd. and shown how to tackle most of the above-mentioned problems encountered if a production network starts off a mini ABC project. In Nassetti case, the writer is able to illustrate another perspective of ABM, namely as operational ABM. With the focus on improving the efficiency of activities and business processes among strategic partners, a production network such as Nassetti can also improve its overall profitability and customer services by launching of improvement initiatives though operational ABM by "doing things right". Finally, the writer synthesizes that an entity (i.e. individual enterprise, production network, extended enterprise or supply chain) is definitely able to improve its overall profitability and customer services through continuous improvements via operational and strategic ABM. As a result, the entity would become more efficient and effective, and thus outperform other competitors, eventually gain competitive advantage in the new basic of competition.

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