Posted in Operations and Supply Chain Terms, Total Reads: 343
Definition: Activity- Based Planning (ABP)
Activity bases planning is a business planning strategy that identifies the types of activities that are needed to produce a desirable level of goods and services and the type and amount of resources required to engage in those activities.
ABP is a part of a larger process known as Activity Based Costing (ABC) and it aims to make sure that the resources engaged by the activities in a business are in the best interests of the company. ABP also evaluates the nature of each activity closely to make sure that there is optimum utilization of resources.
The goal of ABP is assess the activity level that a business must attain in order to produce the amount of product that can satisfy consumer demands. ABP is undertaken to streamline the production process in a way that all resources set aside for business are used in the most efficient manner.
Advantages of ABP:
• Streamlining business operations
• Reduction in operation costs
• Prevention of wastage
• Increase in efficiency of the production process
• Increase in profits due to efficient utilization of resources that results in more profits on each unit sold