Abstract. This paper deals with the application of activitybased management (ABM) in a small company. The project took place in G. E. Mustill, a company that producesmachines for the photo framing industry. This project aims to develop an
ABM system for the company which leads to appropriate improvement actions based on a make or buy decision about di€ erent parts of the machine, `four-head foiler’. Firstly, a theoretical framework for the design of an ABM system is developed.
Then, secondly it is used to improve the businessperformance of four-head foiler manufacturing. The activities required to manufacture this machine are identi® ed and then quanti® ed by their consumption of resources. The factors causing or driving the cost (cost driver) of an activity in question have been identi® ed and used to identify the value-adding and non-valueadding activities. Also, some suggestions are o€ ered to improve the performance of the company using the ABM system.
1. Introduction
The analysis and cost of activities provide ® nancial and non-® nancial information which is the basis for activitybased management (ABM). ABM makes this cost and operational information useful by providing a value
Authors: A. Gunasekaran and R. McNeil, Department of Management, University of
Massachusetts, North Dartmouth, MA 02747-2300, USA, e-mail: agunasekaran@umassd.edu, and D. Singh, Department of Manufacturing and Engineering Systems, Brunel University,
Uxbridge, Middlesex UB8 3PH, UK.
A. GUNASEKARAN is an Associate Professor of Operations Management in the Department of
Management at the University of Massachusetts, Dartmouth, MA 02747, USA. He has a PhD in
Industrial Engineering and OperationsResearch from the Indian Institute of Technology, Bombay
(India). Dr Gunasekaran has held academic positions at Brunel University (UK) , Monash
University (Australia) , the