Operational activities are day-to-day activities performed as a result of the structure and processes selected by the organization. Examples include receiving and inspecting incoming parts, moving materials, shipping products, testing new products, servicing products, and setting up equipment. Operational cost drivers (activity drivers) are those factors that drive the cost of operational activities. They include such factors as number of parts, number of moves, number of products, number of customer orders, and number of returned products. As should be evident, operational activities and drivers are the focus of activity-based costing. Possible operational activities and their drivers are listed in Exhibit 11-3.
The structural and executional activities define the number and nature of the dayto- day activities performed within the organization. For example, if an organization decides to produce more than one product at a facility, then this structural choice produces a need for scheduling, a product-level activity. Similarly, providing a plant layout defines the nature and extent of the materials handling activity (usually a batch-level activity).
Furthermore, although organizational activities define operational activities, analysis of operational activities and drivers can be used to suggest strategic choices of organizational activities and drivers. For example, knowing that the number of moves is a measure of consumption of the materials handling activity by individual products may suggest that resource spending can be reduced if the plant layout is redesigned to reduce the number of moves needed. Operational and organizational activities and their associated drivers are strongly interrelated. Exhibit 11-4 illustrates the circular nature of these relationships.
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