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 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 project(s)

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.

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

identifying relevant cost component categories for organisation, product and process

identifying customers, including final customer and features/benefits as valued by customers

expressing customer features/benefits in cost terms

determining application scope of cost reduction plan, including product/s, 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 costs/benefits

acceptable benefit/cost ratios

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