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 (ABC) has the potential to reduce costs for medical stores and their clients, including ministries of health and USAID. ABC leads to activity-based management, which transforms traditional storage facilities from static warehouses to dynamic distribution centers.
This handbook will help key stakeholders understand what activity-based costing is, the steps involved in implementing ABC and the expected outcomes. The annexes to this handbook provide example tools that are used to implement and practice ABC.