BSBMGT608 Manage innovation and continuous improvement
Assessment 1: Review programs, systems and processes
| You must provide/submit ONE Report (5 – 7 pages)
´ Your report must include: ´ Key Systems and processes used by A.C Gilbert ´ Review strategy for the three processes ´ Monitoring performance ´ Analyse the variance ´ Trends relevant to the organization ´ Advise from specialists |
- Introduction
- Briefly introduce the assignment details.
- Explain the purpose of this task
- Provide a brief overview/background of A.C. Gilbert
- Key systems and process used by A.C. Gilbert (refer to student work book pages 17 and 18 and the diagram on page 15 and 16 of the appendix).Briefly explain what you mean by the following and how they are followed in A.C. Gilbert
- Supply Chain
- Supply chains represent the procurement, production and distribution activities of an organisation.
- Within a supply chain, these activities are viewed as linked and reliant on one another to produce the final outcome.
- C. Gilbert supply chain includes – acquisition of raw material, systems and process and sales delivery
- Operational system
- Use the diagram on page 16 of the appendix and explain
- Product and service delivery
- Use the diagram on page 15 of the appendix
3a. KRAs and KPIs (provide a minimum of three KPIs for each KRAs from the case study)
| KRAs (from case study) | KPIs (examples provided below) from case study
(Actions taken by Jack Wrather pg 6 in Case study) |
Assessment tools and techniques (Which one of the following tools and techniques would you use?) page 30 | Performance and sustainability measures (how will you measure and sustain the performance?) page 12 – 13 |
| Customers | · quality standards – maintain current quality standards and exceed market expectations | · balanced scorecards
· key performance indicators (KPIs) · performance reviews · Service level agreements |
· customer complaints, reduced defects |
| Financials | · sales budgets – achieve increase on previous year sales/$20 million by 1963
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· | · cost control, increase in revenue |
| People | · staff retention – retrain engineers/production staff to meet new production requirements due to increase in range
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· | · employee engagement, professional development, etc. |
| Processes | · production times – meet key retail sales periods.
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· | · Productivity, decreased downtime, |
3b. Performance review process of the three systems (page 21)
Explain, in detail with relevant information from the case study using diagrams, tables, flow charts, any one of the processes you will use to review the performance of the three systems. E.g.
- process maps
- Completing an analysis of each step of the process allows for the identification of improvements and process efficiencies. This involves identifying the start and end points of the process, and mapping all steps in between those two points.
- SWOT analysis
- benchmarking
- check sheets
- graphs and charts.
3b Example of using a Balanced scorecard for reviewing AC Gilbert Performance between 1961-1967
| KRAs (from case study) | Targets
(Actions taken by Jack Wrather pg 6 in Case study |
Steps taken to achieve them (Use Key Milestones on page 7 in the case study) | Actual outcomes |
| Customers | · quality standards – maintain current quality standards and exceed market expectations
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· | · |
| Financials | · sales budgets – achieve increase on previous year sales/$20 million by 1963
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· | · |
| People | · staff retention – retrain engineers/production staff to meet new production requirements due to increase in range
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· In 1962 increased sales staff by 50% | · In 1964 fired most of the top management |
| Processes | · production times – meet key retail sales periods.
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· | · |
3c A sample service level agreement (provide a sample service level agreement – student handbook page – 37)
- For example, a delivery organisation may have SLAs in place to advise customers that they can expect all deliveries to be made within 24 hours of order.
- Effectiveness and Improvements. (Using the data provided for results up to 1966, for each of the three key systems) – Analyse the table above and write your reflections in 3-5 paragraphs
- Describe how each of your measures, assessment tools and techniques would monitor performance. Include specific examples or hypothetical cases to test the effectiveness of the elements of your review strategy.
- Write an evaluation of the effectiveness of your review strategy
- Suggest improvements to your strategy
- Analyse the variances from plans and targets for the key result areas (KRAs) Using the data provided for results up to 1966, include discussion on performance with regards to: You can use graphs/charts as well.
| Performance areas | Planned | Achieved (actuals) | Reasons for variance |
| a. quality – design/manufacturing | |||
| b. sales | |||
| c. profit | |||
| d. supply chain performance (delivery) | |||
| e. business growth – staff and management performance and/or turnover. |
- Analyse trends relevant to the organization. (What trends did A. C. Gilbert fail to identify in the late 1950s? Consider the strengths and weaknesses of the A. C. Gilbert Company prior to 1960. Analyse the following in your report)
| Areas | Strengths | Weaknesses | Missed opportunities | Suggested improvements (What do you recommend that they should have done) |
| a. market share | · experienced personnel
· established quality products and standards · small but profitable · good reputation in the marketplace |
· specialised products – limited range
· focus on past successes, not future growth · poor management – crisis management · lack of training and planning prior to introducing large-scale change |
· changing trends | · recognise changing demands and trends earlier |
| b. reputation | ||||
| c. stability | ||||
| d. profit | ||||
| e. sales | ||||
| f. ability to adapt to change | ||||
| g. customer service standards | ||||
| h. innovation | ||||
| i. employee performance | ||||
| j. production and manufacturing |
- Advice from specialists (Imagine the company did not close in 1967 and has somehow managed to continue operations until today. Discuss the possible use of advice from specialists. What specialists could be consulted to advise on and identify new technology or electronic commerce opportunities) Page 49
| Sources | What type of advice? |
| a. Internal – engineers, production staff, manufacturing staff, sales personnel, human resources personnel | |
| b. External – marketing consultants, advertising experts, engineers or designers, IT consultants. | e.g. Social media marketing |
- Conclusion
Provide a brief summary of the report and what next from here
BSBMGT608 Manage innovation and Continuous improvement
Task 2 Develop options for continuous improvement
| You must submit 4 pieces of evidence
1. One-page+ performance improvement strategy 2. 20–30 minute team briefing and consultation session (We will do the group discussion on 2nd and 3rd weeks This role play is absolutely mandatory and you can present to a small group, once you are ready with your strategy. All the members of your group who observe you will comment and sign in the document and I will co-sign with my own comments 3. Written risk analysis 4. Written cost-benefit analysis |
- Prepare a one page+ performance improvement strategy. The following elements should be there:
- What are your strategic goals?
- How are you going to change the current process in 2017? List your ideas
- c) Explain how these will improve the performance and the company will look competitive.
- d) For each new option/idea
- Develop a risk analysis
- Develop a cost benefit analysis ( sample templates and examples are attached)
- Get approval from the group and the Assessor
(e.g of new ideas – Digital means of advertising – Google ads / personalized advertising on social media- new toys based on movie themes — large super market sales and not small retailers and so on….)
- e) What are your new KRAs, KPIs, targets….
- Briefing and consultation session.
- Once you are ready with your strategy, you can present to the group. All the members of your group who observe you will comment and sign in the document and I will co-sign with my own comments
- Ask the group to go over the pros & cons and incorporate changes to the strategy.
Detailed Template
- Performance improvement strategy:
- a) Strategic goals (Task1 Appendix 1…use the actions taken by Jack Wrather and come up with other SMART goals — e.g. To become a market leader in educational toys/ To increase profits…. )
- b) New performance improvement strategies in 2017 (Student WB pg. 57) &
- c) How your performance will improve competitiveness
(Process re-engineering/ New technology/ Training employees/ New product range / New advertisement models etc…)
(List at least 2 strategies for each Key Result Area… you can list more if you like)
| Area of focus | New performance strategy | How will this improve competitiveness?
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| Processes (using new technology in design, Production, packaging, distribution and marketing – new changes) |
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| Financial (Sales & Profit) |
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| People (training, change management) |
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| Customers (market research…feedback..) |
- For each of the ideas you have proposed do a risk and analysis and a cost-benefit analysis.
Use this standard Risk matrix
2a Risk analysis
| New performance strategy | Impact
(Extreme/ High/medium/low)
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Likelihood
(Very likely, likely, possible, unlikely, HU) |
Mitigation strategies |
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e.g. New process – delays in employees understanding |
Medium impact | Medium likelihood | – Training in new processes to be completed before
– Supervisors to be one the warehouse floor monitoring for the first 3 weeks2b Cost Benefit analysis for each performance improvement option |
| New performance | Cost | Risk | Benefit | Feasible (F)/ May be feasible (MF)/ Not feasible (NF) |
| e.g. Process improvement | · New machinery – $20,000
· Training – $5,000 |
· Down time with the new machinery
· Lack of employee training leading to defective products |
· Increased productivity
· Quality |
F |
3 My new KRAs, KPIs, Targets
| KRAs
Which are would you like to improve |
KPIs
How will you measure the improvement? |
Targets
What is the target usually a numerical figure) |
Initiatives
Steps to improve/achieve the target it? |
| Processes
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Average day taken to produce a scientific toy | 2 days | Reduce the wait time between the processes |
| Financials
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| People
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| Customers
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- How the innovation will improve organization performance
- How the innovation links to the organisation’s strategic and operational goals
- Details of risk assessments
- Details of completed cost-benefit-analysis (CBA)
- Details of how the innovation will be implemented
- action plans for transition, communication
- two contingency plans related to transition and communication action plans
- a written analysis of the causes of implementation failure
- amended action plans and contingency plans
- evaluation and continuous improvement schedule.
- Turn to the case study ‘Implement an innovative process’ (Appendix 1 provide at the end of this task).
- Review ‘Part 1 – Implementation’. Examine all aspects of the new process to be implemented.
- Develop action plans for 1) transition, and 2) communication. In each action plan, include:
- activities, objectives, measures (KPIs), timeframes
- activities to promote the process and sustainability
- activities to communicate costs and benefits to relevant people
- activities to reduce any negative impact on people.
- Develop at least two contingency plans related to possible implementation issues you foresee in relation to activities in your action plans.
- Review ‘Part 2 – Follow up’. Examine implementation issues and failures.
- Critically analyse the causes of these implementation failures and draft a report describing how the contingency plans will address them.
- Amend action plans and contingency plans to address the implementation failures.
- Develop a schedule for evaluation and continuous improvement. Include regularly scheduled:
- evaluation activities, regularly repeated over a suitable timeframe
- evaluation activities to capture learnings from all work activities
- activities to embed learning into work processes.
- Submit documents to your assessor as per the specifications above. Ensure you keep a copy of all work submitted for your records.
Part 1 – Implementation
John Jones, a Production Manager at A. C. Gilbert, has developed an idea for improving efficiencies in the manufacturing process at A. C. Gilbert. The idea came as a result of the innovative ideas program, and John has successfully trialled the program on one line in the processing plant.
The program has been evaluated and found to be successful, and you are now in the process of implementing the program company-wide.
The goal of the program is to increase productivity, reduce waste, improve sustainability, and reduce errors on production lines by 20% by allocating specialist team members to individual lines.
A secondary goal is to reduce staff turnover from an average of 32% per annum to 20% per annum, thus improving the skill levels and efficiencies of the plant and reducing costs in recruiting and training new staff.
Production staff and process workers will be divided into five different teams. Each team will be responsible for the manufacturing of five product lines. Team members will only work on their specialty line, and rosters will be altered to ensure adequate staff on each line during the 12-hour production cycle. This may involve changes to staff rosters, in some cases by implementing 12-hour shifts, but will not impact on earnings or result in the loss of any hours of work.
John also suggested involving teams in goal setting and objective setting for their own product lines. Each month they meet to develop production and error rate projections for the next, with a goal to continuously improve both rates to achieve a maximum of 4% error rate and a 40% increase in productivity within 24 months. Current error rates are at 22%.
To incorporate this change, production lines will be closed for 48 hours for retooling. During this period, staff will be re-trained in the production of their designated lines by shift supervisors. Training required will include technical training, motivational training and quality control procedures along with goal and objective setting workshops.
Costs
It is projected that the costs incurred for the change will be:
| Development costs | |
| ● Initial trial | $150,000 |
| Implementation costs | |
| ● Retooling the production line
● Training ● Loss of productivity |
$1.2 million
$20,000 $50,000 |
| Ongoing costs | |
| ● Initial errors and reduced productivity | $150,000 |
Anticipated savings
By implementing the above measures the following savings have been budgeted:
- savings of $300,000 per annum in staff turnover costs
- savings of $1 million per annum in lost productivity and errors
- savings of $200,000 per annum in service and repairs costs to equipment.
Benefits and concerns
During the trial, a number of advantages and concerns were identified. There were initial fears that staff would become bored and complacent, continually producing the same lines. Analysis during the pilot found that, after the first week, staff became quite ’proud‘ of their output and felt a degree of ownership for the lines they were responsible for. Morale improved in a team environment.
Employees were initially reluctant to participate in setting their own error and productivity targets. They tended to overestimate the percentages and did not wish to commit to large improvements. Managers feel it will take some time and training in understanding the financials and operational reports for them to set realistic targets.
Many employees lack formal education and some have limited English, which was also an area of concern when trying to involve them in what they perceived to be ‘management decisions’. This style of management is a huge change in the workplace. Most employees were used to being lectured for making mistakes, rather than encouraged to participate in decision-making and feeling like they have some ownership of the process and outcomes. There is some reluctance and anxiety involved and a degree of resistance from some long-term employees, who feel they are being asked to do a management job and should be paid accordingly. Management fear there could be some industrial relations implications.
Other concerns revolve around productivity levels during the transition. It is understood that it will take some time for employees to operate at full productivity, as they will be working on new production lines and different products. Concerns that deliveries won’t be met and customers will be disadvantaged are key concerns for management.
From a technology standpoint, the new production lines will be faster and more efficient. However, the current service technicians are used to the old lines and lack the experience to service and maintain the new equipment. It is possible that breakdowns could impact on production targets.
Part 2 – Follow-up
- The new program has been in place for eight weeks with the following outcomes:
- productivity has decreased by 8% to 66%
- delays on the line have increased by 10%
- waste has increased by 10%
- error rates have fallen by 2% to 20%
- 15 out of 300 staff have resigned since the new program was introduced, including two shift supervisors.
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After 16 weeks:
- productivity remains at 66%
- delays on the lines have improved and are now at pre-change levels
- error rates have remained steady at 20%
- staff levels have remained steady.
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- New machines are very different; training was not sufficient.
- Employees feel that figures don’t mean much to them – they are struggling to understand what % rates have to do with their day-to-day workload.
- Employees understand the importance of sustainability, but have no idea how to apply sustainable practices to workplace or amend own work practices to make them more sustainable.
- New rosters have been unpopular with some employees.
- 12-hour shifts were introduced to keep teams together but they are causing difficulties for staff with regards to managing their families.
- Longer shifts are also resulting in people becoming tired and making errors.
- The OHS representative is concerned that injuries might increase as a result.
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