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Evidence Guide: MSS405030 - Optimise cost of a product or service

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Tips for gathering evidence to demonstrate your skills

The important thing to remember when gathering evidence is that the more evidence the better - that is, the more evidence you gather to demonstrate your skills, the more confident an assessor can be that you have learned the skills not just at one point in time, but are continuing to apply and develop those skills (as opposed to just learning for the test!). Furthermore, one piece of evidence that you collect will not usualy demonstrate all the required criteria for a unit of competency, whereas multiple overlapping pieces of evidence will usually do the trick!

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MSS405030 - Optimise cost of a product or service

What evidence can you provide to prove your understanding of each of the following citeria?

Analyse total cost components of a product or service

  1. Identify all cost components of product or service.
  2. Allocate cost components to major categories, such as overhead, depreciation, energy, consumables and labour.
  3. Distinguish between costs which directly deliver customer features/benefits and muda (waste).
Identify all cost components of product or service.

Completed
Date:

Teacher:		 Evidence:

 

 

 

 

 

 

 

Allocate cost components to major categories, such as overhead, depreciation, energy, consumables and labour.

Completed
Date:

Teacher:		 Evidence:

 

 

 

 

 

 

 

Distinguish between costs which directly deliver customer features/benefits and muda (waste).

Completed
Date:

Teacher:		 Evidence:

 

 

 

 

 

 

 

Optimise costs

  1. Analyse causes of costs which lead to customer features/benefit.
  2. Determine methods of increasing the customer benefit/cost ratio.
  3. Analyse causes of muda costs.
  4. Determine methods of reducing/eliminating muda costs.
  5. Analyse interactions between cost components.
  6. Check that one method of reducing costs does not cause an increase in another cost/reduction in consumer benefit.
  7. Check that cost reduction plans do not reduce required levels of regulatory compliance or work health and safety (WHS).
Analyse causes of costs which lead to customer features/benefit.

Completed
Date:

Teacher:		 Evidence:

 

 

 

 

 

 

 

Determine methods of increasing the customer benefit/cost ratio.

Completed
Date:

Teacher:		 Evidence:

 

 

 

 

 

 

 

Analyse causes of muda costs.

Completed
Date:

Teacher:		 Evidence:

 

 

 

 

 

 

 

Determine methods of reducing/eliminating muda costs.

Completed
Date:

Teacher:		 Evidence:

 

 

 

 

 

 

 

Analyse interactions between cost components.

Completed
Date:

Teacher:		 Evidence:

 

 

 

 

 

 

 

Check that one method of reducing costs does not cause an increase in another cost/reduction in consumer benefit.

Completed
Date:

Teacher:		 Evidence:

 

 

 

 

 

 

 

Check that cost reduction plans do not reduce required levels of regulatory compliance or work health and safety (WHS).

Completed
Date:

Teacher:		 Evidence:

 

 

 

 

 

 

 

Implement cost optimisation

  1. Develop cost optimisation plans.
  2. Negotiate with relevant people to agree on implementation plans.
  3. Take actions to implement the cost optimisation.
  4. Monitor the implementation of the cost optimisation.
  5. Make adjustments to the plan, as required.
Develop cost optimisation plans.

Completed
Date:

Teacher:		 Evidence:

 

 

 

 

 

 

 

Negotiate with relevant people to agree on implementation plans.

Completed
Date:

Teacher:		 Evidence:

 

 

 

 

 

 

 

Take actions to implement the cost optimisation.

Completed
Date:

Teacher:		 Evidence:

 

 

 

 

 

 

 

Monitor the implementation of the cost optimisation.

Completed
Date:

Teacher:		 Evidence:

 

 

 

 

 

 

 

Make adjustments to the plan, as required.

Completed
Date:

Teacher:		 Evidence:

 

 

 

 

 

 

 

Assessed

Teacher: ___________________________________ Date: _________

Signature: ________________________________________________

Comments:

 

 

 

 

 

 

 

 

Instructions to Assessors

Evidence Guide

Elements describe the essential outcomes.

Performance criteria describe the performance needed to demonstrate achievement of the element.

1

Analyse total cost components of a product or service

1.1

Identify all cost components of product or service.

1.2

Allocate cost components to major categories, such as overhead, depreciation, energy, consumables and labour.

1.3

Distinguish between costs which directly deliver customer features/benefits and muda (waste).

2

Optimise costs

2.1

Analyse causes of costs which lead to customer features/benefit.

2.2

Determine methods of increasing the customer benefit/cost ratio.

2.3

Analyse causes of muda costs.

2.4

Determine methods of reducing/eliminating muda costs.

2.5

Analyse interactions between cost components.

2.6

Check that one method of reducing costs does not cause an increase in another cost/reduction in consumer benefit.

2.7

Check that cost reduction plans do not reduce required levels of regulatory compliance or work health and safety (WHS).

3

Implement cost optimisation

3.1

Develop cost optimisation plans.

3.2

Negotiate with relevant people to agree on implementation plans.

3.3

Take actions to implement the cost optimisation.

3.4

Monitor the implementation of the cost optimisation.

3.5

Make adjustments to the plan, as required.

Required Skills and Knowledge

Elements describe the essential outcomes.

Performance criteria describe the performance needed to demonstrate achievement of the element.

1

Analyse total cost components of a product or service

1.1

Identify all cost components of product or service.

1.2

Allocate cost components to major categories, such as overhead, depreciation, energy, consumables and labour.

1.3

Distinguish between costs which directly deliver customer features/benefits and muda (waste).

2

Optimise costs

2.1

Analyse causes of costs which lead to customer features/benefit.

2.2

Determine methods of increasing the customer benefit/cost ratio.

2.3

Analyse causes of muda costs.

2.4

Determine methods of reducing/eliminating muda costs.

2.5

Analyse interactions between cost components.

2.6

Check that one method of reducing costs does not cause an increase in another cost/reduction in consumer benefit.

2.7

Check that cost reduction plans do not reduce required levels of regulatory compliance or work health and safety (WHS).

3

Implement cost optimisation

3.1

Develop cost optimisation plans.

3.2

Negotiate with relevant people to agree on implementation plans.

3.3

Take actions to implement the cost optimisation.

3.4

Monitor the implementation of the cost optimisation.

3.5

Make adjustments to the plan, as required.

Evidence required to demonstrate competence in this unit must be relevant to and satisfy the requirements of the elements and performance criteria and include the ability to optimise costs for one (1) or more products or services and to:

analyse all cost components

optimise costs and minimise muda

implement the cost optimisation.

Must provide evidence that demonstrates sufficient knowledge to interact with relevant personnel and be able to optimise costs, including knowledge of:

cost component categories

methods of allocating indirect costs and their implications

expressing customer perceived benefit in cost or dollar value terms

major controllable costs for the organisation, and how to control them

types of muda and how to reduce it

benefit cost/ratios, their determination and application.

Range Statement

This field allows for different work environments and conditions that may affect performance. Essential operating conditions that may be present (depending on the work situation, needs of the candidate, accessibility of the item, and local industry and regional contexts) are included.

Competitive systems and practices include one or more of:

lean operations

agile operations

preventative and predictive maintenance approaches

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.

Muda (waste) includes all of:

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 includes all of:

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 include all of:

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.