Resources are traced to the activity. The input, often the output of another department's activity, triggers the work. Activity output is measured in terms of workload, cost per output, and quality. Products consume the output of activities. Product Costs are created via a Bill of Activity.
Products consume the output of activities.
Cost reduction is accomplished with the ABM Method by applying appropriate continuous improvement tools such as Value Analysis, Process Redesign, Root Cause Analysis, and Benchmarking. Activity Analysis techniques are similar to the porridge in Goldilocks and the Three Bears. It can be either too hot, too cold, or just right. Depending on the size, industry type, and complexity of your organization, a consultant should be able to predict, with reasonable accuracy, the number of activities they expect to find. Collecting information at this level results in an information system full of tasks, not activities.