ABC Tool & Benchmarking Database.
Abstract
Winery production costs and performance metrics via Activity Based Costing (ABC) techniques can provide valuable information that wineries can use to assess their production costs and benchmark their performance. This project involved developing a user-friendly, winery specific ABC tool to encourage wineries to make data-driven, evidence-based decisions to improve operations.
The project used a variety of data allocation methods and iterations of industry consultation to develop and refine a web-based ABC tool. This tool is now available for the Australian Wine Industry.
Summary
A fundamental knowledge gap exists in the wine industry in the form of publicly accessible wine processing and production cost information. This information is critical for driving operational improvements and improving decision-making.
This data can allow wineries to assess their production performance, compare their performance internally, and compare performance with peer wineries. This data can be used to both encourage and empower wineries to make data-driven, evidence-based decisions on process improvement projects, improve operations and maximise profitability, sustainability and efficiency.
Activity Based Costing (ABC) is a costing method that identifies activities and assigns operational costs to these activities. In the case of the wine industry, these activities comprise the various steps and different methods used in the wine production process.
The principle behind Activity Based Costing (ABC) is that activities are the primary drivers of operating costs. In order to better manage costs, it is critical for wineries to understand how operational process steps or activities consume costs and resources.
The result of ABC is the provision of information that can help inform wineries and provide a strategic direction to modify or change processes to improve efficiency and performance.
Traditional ABC can be time intensive and requires basic levels of operational information. The ABC Tool was developed in consultation with the wine industry to identify readily accessible
sources of information, without being burdensome on time and effort. The overall objective was to create a simplified, winery specific ABC Tool that provides critical production information while
minimising user effort.
Based on industry feedback, two critical requirements for the tool was to minimize the time and effort required for data collection and input, while providing visual information to enable users to understand performance at a glance.
The benchmarking portion of the ABC Tool collects anonymous aggregated data to develop an overall industry benchmark in relation to the size of the winery. As more wineries use the tool, the industry benchmarking information will continue to improve in accuracy providing effective benchmarking for year-on-year performance.
Multiple iterations of the ABC tool were developed in response to industry consultation, user experiences and the development of pertinent data. The ABC Tool is now a publicly accessible
online tool that wineries can use to create their own ABC model while identifying and comparing industry performance benchmarks.
Resources were invested in simplifying the tool, increasing the user experience and providing real time feedback to wineries as users entered data into the system (e.g. providing performance metrics as resource quantities were entered into the system). This was done to encourage wineries to continue to use and complete the tool based on the information available. Wineries with the data readily available (through internal resource tracking systems), will be able to rapidly generate their own model. Wineries without this critical internal performance data will be encouraged to implement systems to collect this data both for the ABC tool and for basic operatingperformance.
The tool is publicly accessible but has not been widely publicised. Despite this, wineries have used and accessed the tool based on word of mouth. Ongoing effort will be required to promote and encourage the use of this tool so wineries can drive and create their performance models and improve winery efficiency.