Activity-based management as economic effect measurement for implementing ISO 9001:2015 clause

Muhammad Rosiawan, Moses Laksono Singgih and Erwin Widodo

International Journal of Services and Operations Management, 2021, vol. 40, issue 1, 1-22

Abstract: This paper aims to measure the overhead costs and economic effects of applying ISO 9001 clauses in manufacturing companies. The activity-based management (ABM) approach is used to allocate cost objects and to trace the source of costs for high-cost activities when implementing the ISO 9001 clause. Inbound logistics processes, which consist of purchasing raw materials and warehouse processes, were used as the research objects for implementing the ISO 9001 clause. From the results of the numerical calculations based on the conceptual models and mathematical equations developed, the company obtained cost savings first from a reduction in high-cost activities and second, from the performance targets achieved. However, companies need to consider the number of performance indicators in the business processes precisely. This is because it affects the cost savings obtained and the return period of investment in the ISO 9001 implementation programs.

Keywords: activity-based management; ABM; ISO 9001; overhead cost; cost savings; payback period. (search for similar items in EconPapers)
Date: 2021
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