What is Activity Based Planning?

If you create a business plan, the most important thing is the strategy, focusing on activities.

Activity-based planning represents a highly strategized business plan for a successful business operation to produce a desirable quality of services. Activity-based planning means carefully focusing on activities that catalyze production and help manufacturing services meet consumer demands. It involves carefully observing each step of the business process to move from one section to another. The primary motive of Activity-based planning is to enhance productivity at each level. Its basic approach is activity-based costing (ABC), which determines if the expenditure on resources is valid enough. The process includes the evaluation of resources to analyze their utility potential in the system.

Activity-Based Costing calculation example:

Keeping this approach, business owners can set up a limit on resource expenditure. Resources include raw materials, goods or services, number of employees, and various other factors.

By limiting the waste of resources, high-scale production can be reached with the least resources. Shuffling the production floors, keeping machines and labor ratio checked, and regular meetings and discussions also come under Activity-based planning.

Practical activity-based planning video – Planning Analytics for Activity-Based Costing:

Activity-based planning keeps businesses streamline and reduces the operation cost. The approach also helps in leveraging maximum benefit from labor and other resources. The perfect balance between investment and profits help in making businesses functional over a long time.

Daniel Smith

Daniel Smith

Daniel Smith is an experienced economist and financial analyst from Utah. He has been in finance for nearly two decades, having worked as a senior analyst for Wells Fargo Bank for 19 years. After leaving Wells Fargo Bank in 2014, Daniel began a career as a finance consultant, advising companies and individuals on economic policy, labor relations, and financial management. At Nimblefreelancer.com, Daniel writes about personal finance topics, value estimation, budgeting strategies, retirement planning, and portfolio diversification. Read more on Daniel Smith's biography page. Contact Daniel: daniel@nimblefreelancer.com

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