ABM for Engine Maintenance
US Airways implemented an activity-based management (ABM) system to manage its in-house engine maintenance business unit, First, ABM helped determine the cost of engine maintenance with increased accuracy, Second, ABM provided operational and financial information that allowed work teams to identify opportunities for improvement, Thus, ABM provided accurate cost information and simultaneously revealed opportunities for improvement. ABM identified 410 activities-such as tear down, welding, waiting for tooling, and rework-of which 47 were identified as non-value-added. The non- value-added activities were rank-ordered on the basis of activity cost, which provided information about there the most significant process improvement opportunities were located. The various work teams then investigated the root causes of the efforts being expended on the non-value-added activities. Once the root causes were identified, the teams took action to reduce or eliminate the –non-value-added activities. The net result was a process savings of 4.3 million per year.