| Concept | Traditional Method | ABC | JIT and Lean Enterprise |
| Original purpose | Inventory valuation, matching and overall profit | More accurate product costs for management decisions | Reduce waste and increase efficiency |
| Expanded purpose | Management control – variance analysis | Leads to activity based management | System philosophy of Continuous improvement |
| Concept of optimization | Promotes sub-system optimization | Not addressed by ABC | Promotes system optimization |
| Emphasis on improvement | Assumes a static set of constraints to optimize within, not improvement | Not addressed by ABC, but extends to activity analysis | Kaizen to reach perfection using the Plan-Do-Check-Action technique |
| Orientation | Short run emphasis with long run implications | Long run variable costs | Long run improvement |
| Main Concept | Production and value added by production departments | Cost tracing to provide accurate costs and profits by cost object, e.g., products etc | The whole system: interdependence, cooperation and synergy |
| Production control or emphasis | Push system with emphasis on labor efficiency and production volume | Not addressed | Pull system using kanban authorizations to produce |
| Overhead cost allocation emphasis & drivers | Allocate using production volume based drivers | Trace to activities, then to products using various drivers | Assign costs based on cycle time in the cells |
| Product costs accuracy | Not accurate – distorted | Fairly accurate | Fairly accurate |
| Inventory levels | High | Not addressed | Minimum to zero |
| Waste | Price and quantity variances | Not addressed, extends to ABM | Emphasis on eliminating |
| Quality of conformance | Inspect to find spoilage | Not addressed | Quality at the source, Jidoka |
| Effect producing excess inventory has on profit | Increases profit | Increases profit | Using throughput costing it decreases profit |
| Signals towards increasing product diversity | Tends to promote it by showing that more diversity creates higher production volume and lower unit cost | Discourages it by showing the additional costs created by product diversity, i.e., overhead creeps up | Discourages it through the concepts of focused factories & dedicated cells |
| Recognition of the concept of variability | No explicit recognition of common cause variation | Not addressed specifically from the SPC perspective, but it recognizes that diversity creates variation in costs | Recognized and applied at the operator level with statistical process control (SPC) techniques |
| Performance Measurements | Mainly financial measurements, i.e., variances, Net income and return on investment | Product costs, service activity costs and customer costs all related to profitability | Non-financial measurements such as cycle time, on time delivery, quality (% defects) inventory turns as well as unit costs |
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