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A costing system that identifies the various activities performed in a firm and uses multiple cost drivers (non-volume as well as the volume based cost drivers) to assign overhead costs (or indirect costs) to products. Activity based costing considers the impact and relationship of cost drivers with activities performed. Activity Based Costing can really help and is a major factor in lean, 5s, 6s, 6 sigma to find out more information on ABC or lean principles please click on the blue link.

6 Sigma A scientific data-driven approach for achieving 6 standard deviations between the mean and nearest specifications limit. Six Sigma methods can be applied to all aspects of manufacturing, transactional processes, and virtually any form of work or processing. We offer a bunch of lean and 6 sigma definitions on our web pages.

In application we have found a Lean Manufacturing approach to correcting serious problems and realizing significant gains followed by using 6 Sigma methods to “fine tune” and realize further gains to be a very effective strategy.

Many now use the term “Lean Sigma” to reinforce the cooperative nature and capabilities of each improvement tool.