Tool: Activity-based Costing Handbook

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Donors and country governments are beginning to use activity-based costing, a traditionally private-sector approach to measuring warehousing costs, as a way to better understand cost drivers, identify inefficiencies in warehousing processes and costs, implement process improvements to lower costs, and continually evaluate performance for further improvements. Activity-based costing, or ABC, engenders a way to measure the costs of warehousing activities, from receiving, to put away, to picking and packing . For programs funded by the U.S. President’s Emergency Plan for AIDS Relief (PEPFAR), activity-based costing will be an emphasis in 2021 and beyond.

This handbook will help GHSC-PSM’s country directors and other key staff, USAID activity managers, country governments and other key audiences understand what ABC is, the steps involved in implementing ABC, and the expected outcomes. The annexes to this handbook provide samples that are used to implement and practice ABC.