MSS402031A Interpret product costs in terms of customer requirements

Release: 1

MSS402031A Interpret product costs in terms of customer requirements

Modification History

New unit, superseding MSACMT231A Interpret product costs in terms of customer requirements - Equivalent

Unit Descriptor

This unit of competency covers the skills and knowledge required by an individual to be able to identify the major cost components of either products or processes, the basic relationship of these to customer benefit, and use this to help minimise waste (defined as anything not delivering value as defined by the customer). It has a different focus to MSS402030A Apply cost factors to work practices, which focuses on costs in isolation, whereas this unit regards all costs not directly leading to customer benefit as waste.

Application of the Unit

This unit applies to an individual who uses their understanding of the customer's requirements of the product or process being undertaken as the basis for investigating work processes to identify waste sources and then takes action relevant to their level of competency and authority to reduce this waste. It requires an understanding of both the cost factors in the products they make and also the benefits which the customer derives from the product.

This competency may be performed individually or in a team-based environment.

This unit requires the application of skills associated with analysis and problem solving to identify waste and determine ways to minimise waste. This unit requires initiative and enterprise and application of learning in concepts of waste and waste minimisation.

Licensing/Regulatory Information

Not applicable.

Pre-Requisites

Not applicable.

Employability Skills Information

This unit contains employability skills.

Elements and Performance Criteria Pre-Content

Elements describe the essential outcomes of a unit of competency.	Performance criteria describe the performance needed to demonstrate achievement of the element. Where bold italicised text is used, further information is detailed in the required skills and knowledge section and the range statement. Assessment of performance is to be consistent with the evidence guide.

Elements and Performance Criteria

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 and Knowledge

This section describes the skills and knowledge required for this unit.
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

Evidence Guide

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.

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
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(s)

Unit sector	Competitive systems and practices

Custom Content Section

Not applicable.