1

Analyse customer benefits to determine appropriate or waste costs

1.1

Analyse product or service to determine features/benefits perceived by customer in product

1.2

Analyse cost components of product or service and determine those which deliver customer features/benefits and those which are either appropriate or waste

1.3

Determine any additional features that may be added to improve saleability

1.4

Analyse waste cost components and allocate to direct and indirect cost categories

1.5

Determine options for reducing direct and indirect waste costs

1.6

Select cost-related actions which maximise customer benefits and minimise costs

1.7

Where required, undertake competitor benchmarking to provide reference points

2

Analyse performance variance

2.1

Identify waste processing or operational steps for product or service following completion of customer benefit analysis

2.2

Analyse all costs and determine methods of reducing costs/waste

2.3

Develop plan and recommendations for actions required to achieve cost improvement or added customer benefits to improve saleability

2.4

Submit plan and recommendations to stakeholders

Required skills

Required skills include:

undertaking self-directed problem solving and decision-making on issues of a broad and/or 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

determining customer features/benefits added to products at each operational step

relating cost components to customer features/benefits

distinguishing between direct and indirect costs

identifying relevant cost component categories for product

determining application scope of cost reduction plan, including products, areas, employees and suppliers included in plan

undertaking competitor benchmarking for reference in cost analysis

Required knowledge

Required knowledge includes:

customer features/benefits from products

impact of customer features/benefits on sales, market share and firms profitability

performance and cycle times for products made or service provided

major costs which are controllable (and how to control them)

types of waste (muda)

methods of reducing waste

methods of reducing cycle time

desirability of improving performance and methods of reducing cycle time

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:

identify customer features/benefits for a product and their impact on market share or saleability of the product

determine direct/indirect costs in a product

determine which costs are waste

analyse cycle times and make suggestions for reduction in cycle time

develop a cost/waste reduction 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 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

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, 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, power and water) where a direct monetary value cannot be identified

Determine customer feature/benefits

This unit does not require that customer features/benefits must be obtained by the person undertaking the unit directly contacting customers. The features/benefits may have already been determined by sales and marketing personnel and passed on to operations. However, the unit requires that the product or process must be analysed to determine how the product or process supplies the features/benefits and by which step/feature of the product or process

Performance

Performance is may be thought of as the rate of output or delivery of the performance or service compared to the rate required to meet demand for the product or service

Cycle time

Cycle time includes:

the normal time to complete an operation on a product

Pull

Pull is the concept of producing to demand, rather than for stock or some forecast

Unit sector

Competitive systems and practices