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Follow the links below to find material targeted to the unit's elements, performance criteria, required skills and knowledge

Elements and Performance Criteria

1. Analyse total cost components of a product or service
   • Identify all cost components of product or service
   • Allocate cost components to major categories, such as overhead, depreciation, energy, consumables and labour
   • Distinguish between costs which directly deliver customer features/benefits and waste

Required Skills

Required skills

Required skills include undertaking selfdirected problem solving and decisionmaking on issues of a broad andor highly specialised nature and in a wide variety of contexts communicating at all levels in the organisation and value chain and to audiences of different levels of literacy and numeracy identifying relevant cost component categories for organisation product and process identifying customers including final customer and featuresbenefits as valued by customers expressing customer featuresbenefits in cost terms determining application scope of cost reduction plan including products areas employees and suppliers included in plan

Required knowledge

Required knowledge includes cost components of product major costs which are controllable and how to control them concept and types of waste muda interrelationship of cost components and costs and benefits including methods of estimating costsbenefits acceptable benefitcost ratios

Evidence Required

The evidence guide provides advice on assessment and must be read in conjunction with the performance criteria required skills and knowledge range statement and the Assessment Guidelines for the Training Package
Critical aspects for assessment and evidence required to demonstrate competency in this unit	A person who demonstrates competency in this unit must be able to provide evidence of their ability to determine relevant cost categories for a product or service determine which costs are waste develop a cost optimisation plan implement and monitor the plan
Context of and specific resources for assessment	Assessment of performance must be undertaken in a workplace using or implementing one or more competitive systems and practices Access may be required to workplace procedures and plans relevant to work area specifications and documentation relating to planned currently being implemented or implemented changes to work processes and procedures relevant to the assessee documentation and information in relation to production waste overheads hazard controlmanagement reports from supervisorsmanagers case studies and scenarios to assess responses to contingencies
Method of assessment	A holistic approach should be taken to the assessment Competence in this unit may be assessed by using a combination of the following to generate evidence demonstration in the workplace workplace projects suitable simulation case studiesscenarios particularly for assessment of contingencies improvement scenarios and so on targeted questioning reports from supervisors peers and colleagues thirdparty reports portfolio of evidence In all cases it is expected that practical assessment will be combined with targeted questioning to assess underpinning knowledge Where applicable reasonable adjustment must be made to work environments and training situations to accommodate ethnicity age gender demographics and disability
Guidance information for assessment	Assessment processes and techniques must be culturally appropriate and appropriate to the oracy language and literacy capacity of the candidate and the work being performed

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Range Statement

The range statement relates to the unit of competency as a whole. It allows for different work environments and situations that may affect performance. Bold italicised wording, if used in the performance criteria, is detailed below. Essential operating conditions that may be present with training and assessment (depending on the work situation, needs of the candidate, accessibility of the item, and local industry and regional contexts) may also be included.
Competitive systems and practices	Competitive systems and practices may include, but are not limited to: lean operations agile operations preventative and predictive maintenance approaches monitoring and data gathering systems, such as Systems Control and Data Acquisition (SCADA) software, Enterprise Resource Planning (ERP) systems, Materials Resource Planning (MRP) and proprietary systems statistical process control systems, including six sigma and three sigma Just in Time (JIT), kanban and other pull-related operations control systems supply, value, and demand chain monitoring and analysis 5S continuous improvement (kaizen) breakthrough improvement (kaizen blitz) cause/effect diagrams overall equipment effectiveness (OEE) takt time process mapping problem solving run charts standard procedures current reality tree Competitive systems and practices should be interpreted so as to take into account: the stage of implementation of competitive systems and practices the size of the enterprise the work organisation, culture, regulatory environment and the industry sector
Waste	Waste (also known as muda in the Toyota Production System and its derivatives) is any activity which does not contribute to customer benefit/features in the product. Within operations, categories of waste include: excess production and early production delays movement and transport poor process design inventory inefficient performance of a process making defective items activities which do not yield any benefit to the organisation or any benefit to the organisations customers
Cost	Cost includes: the monetary value of expenditures able to be directly identified for supplies, services, direct labour, materials, components, cost of inventory, faults and reworks, rejects/scrap, equipment and other items used in the production of the product allocations and estimates for indirect costs (e.g. indirect labour, rent, energy, water and cost of capital) where a direct monetary value cannot be identified
Cost optimisation plans	Cost optimisation plans should include: application scope (e.g. product/s, services, areas, employees and suppliers included in plan) target costs and target cost reductions implementation period method of monitoring method of communicating progress to stakeholders

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