1

Identify cost components deriving from customer benefit and other costs

1.1

Identify customer features/benefits in product or process being undertaken

1.2

Identify cost components which deliver customer features/benefits and those which do not

2

Compare required performance of product or process steps with actual performance

2.1

Identify performance required to meet customer needs in own work and that of team

2.2

Identify actual performance

2.3

Compare cost components of products or process with current customer-related targets

2.4

Separate costs components into those that contribute to customer features/benefits and those that do not

2.5

Determine non-contributing cost components which are under control of the individual or team

3

Minimise waste

3.1

Recommend changes to eliminate or reduce waste

3.2

Adopt changes which minimises waste

3.3

Monitor effect of changes to ensure gains are made against customer features/benefits

Required skills

Required skills include:

identifying customer benefit in own work and that of the individual’s team

identifying financial and other performance indicators for own work and of team, including where appropriate, takt time

communicating with others to clarify cost factors and contribute suggestions for improvement

visualising normal operational procedures in terms of flow

distinguishing between fixed and variable costs

classifying fixed and variable cost components in terms of relevancy to customer benefit, including where applicable:

power/energy

materials, plant and equipment

production or process time, including impact on salary and wages

required and unnecessary downtime

office expenses

government taxes and charges

Required knowledge

Required knowledge includes:

value as defined by the customer and the relevancy to own and team’s work

ability to access company information about:

customer features/benefits

cost components of products made

costs concepts, such as expense and income

major cost contributors to product (e.g. energy)

the difference between internally and externally controlled costs

difference between overhead, labour and consumables

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 the ability to:

identify customer benefit from own and team’s work

express cost factors (financial and other factors) in specific terms (e.g. cost per item, process and task), and not just in a general manner

identify and express costs factors in simple financial terms

contribute suggestions for improvement to minimise waste and overall costs.

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 and hazard control/management

reports from supervisors/managers

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 studies/scenarios (particularly for assessment of contingencies, improvement scenarios, and so on

targeted questioning

reports from supervisors, peers and colleagues (third-party 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.

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

Customer features/benefits

Customer features/benefits include:

characteristics of the product or service which add value to the customer, this value may be assessed in financial or features terms

The customer may be:

internal or external

Performance

Performance may include:

the rate of output of the plant compared to the rate required to meet demand

takt, where takt time is the allowable time to produce one product at the rate and quality customers are demanding it (this is NOT the same as cycle time, which is the normal time to complete an operation on a product – which should be less than or equal to takt time)

Customer-related targets

Customer-related targets include:

internally set financial and operational targets that contribute to meeting customer features/benefits

Contributing and non-contributing cost components

Contributing costs include:

costs that make a direct contribution to customer features/benefits. These costs continue to need to be incurred (although they may be minimised) in order to gain the customer feature/benefit

Non-contributing costs include:

other costs that do not contribute to customer features/benefits. These may be costs that must be maintained, such as regulatory compliance and occupational health and safety (OHS) costs and other costs which are not required and do not contribute to customer features and so should be eliminated if possible (this is also defined in terms of waste – see below)

Waste

Waste (also known as muda in the Toyota Production System and its derivatives) includes:

any activity which does not contribute to customer or organisation benefit/features in the product

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

Waste for this unit may include activities which do not yield any benefit to the organisation or any benefit to the organisations customers

Unit sector

Competitive systems and practices