Activity Based Costing (ABC) as a tool for Lean Transformation: The Case of the Greek Power Public Corporation (PPC)

This research highlights the malfunctions and the inaccurate information of the conventional cost methods that are used nowadays in most Greek public companies. It poses as a research topic the resolution of the above mentioned problem with the development of a reliable and accurately informative cost system based on the ABC method, which will offer support to those companies concerning the amelioration of their total performance and function. This paper also shows the ability of the ABC costing method as a tool which contributes to the transition from a traditional public corporation to a lean corporation after the fulfillment of three fundamental points. First prevents distortions of the cost of activities of a company with the provision of exact measure of the cost of those activities then defines the non value added activities so it limits the wastefulness in a corporation and final introduces the mentality of lean thinking to the employees of the corporation, since each employee knows the flow of the action he performs, its cost and value. This paper includes a contrast on a theoretical basis of the traditional cost systems and the ABC method, presents an application of ABC and a case study of applying ABC to a Greek Public Company investigating its use as a lean tool that helps the saving of resources and the transition to a lean production model.