Activity based performance measurement (ABPM) can assess business performance at the activity level and then, aggregate these fine-grained metrics upward to the business unit and firm level. ABPM is more flexible and leverages insights gained during the measurement effort more effectively than traditional, project-based return-on-investment approaches. It also offers greater visibility into where in the supply chain benefits will be achieved, thus providing guidance for managing the implementation and negotiating with supply chain partners. ABPM is based on two insights. The first is that costs come mainly from an activity’s parts, while benefits usually result from how an activity affects other activities. As a result, measuring costs is relatively easy, but measuring benefits is hard. The second insight is that there are common patterns in the types of benefits associated with activities that have similar underlying characteristics.
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