Understanding Manufacturing Integration

Activity-Based Management enables you to use routing information from PeopleSoft Manufacturing to set up activity driver information within the system. Activity-Based Management can determine which activity is performed on which cost object as well as determine the quantifiable measures for that relationship. It uses Bill of Materials (BOM) information from Manufacturing and transforms the components within the BOM hierarchy into cost objects. In addition, Activity-Based Management is able to maintain the BOM structure. This is important because once you have run the Activity-Based Management engine, each component contains cost information. The roll-up of these costs using the BOM hierarchy results in a total indirect cost of the resources, activities, and cost objects. This total indirect cost is then directed back to the Cost Management environment.