BSBMGT516 Facilitate Continuous Improvement

Assessment Task 1 Plan and lead continuous improvement

Part A: Prepare and deliver a presentation

1. Review the following scenario.
You are a continuous improvement consultant. Australian Hardware
has contracted you to analyze the business in order to propose and
overall approach to continuous process improvement, including a
general methodology such as Lean or sigma.

The approach will be used across the business, including application

to areas such as:
 Sustainability across the organization
 Revenue per customer interaction
 Operational costs
 Customer service satisfaction across product areas such as
timber, plumping and electrical, garden products, hardware, tools
and homewares
 Delivery lead times for customers.

You will need to consider the appropriateness and applicability for

different continuous improvement methodologies in order to find the
best fit for Australian Hardware.

In your overall approach, you will need to develop several supporting

strategies and procedures.

You intend to trial your proposed quality systems and processes at

the Wollongong store.

You will need to gather feedback from the management team on

your proposed continuous improvement approach. In accordance
with organizational practice, you will need to prepare a summary
report incorporating feedback and suggestions for amendments and
refinements.
 BSBMGT516 Facilitate Continuous Improvement

2. Review Australian Hardware documentation.

The Business
Business details/history: Australian Hardware opened its first store
under the name of Percy's Home Goods in George St Sydney in 1921.
Percy's Home Goods initially specialized in the manufacturing and
sale of small household furniture. In 1982 Australian Hardware was
listed on the Australian Stock Exchange and was offered to the public
in a share float. The business has continued to expand to now have
138 stores and approximately 10,000 staff across the country.

Ownership and governance: The Greenwright family retains a

controlling interest in Australian Hardware. Holden Greenwright
serves as both chair of the board of directors and CEO.

Products: Australian Hardware supplies products in the following

categories to general and trade customers:

 Timber  Housewares
 Hardware  Outdoor
 Tools  Garden
 Paint

The Market
Target market: The market has been divided into three target markets
or segments: Home improvers, DYIs, tradespersons.

Marketing Strategy: Australian Hardware takes a two-pronged

strategic approach characterized by product and service
differentiation along with select-targeted marketing activities.

The Future
Mission Statement: Australian Hardware provides the best quality
hardware, homewares, garden supplies and building materials from
Australia and the world. Australian Hardware is committed to
providing customers and tradespeople with value through everyday
low prices, product quality, expert service, community engagement
and environmental responsibility.

Vision Statement: Within five years, Australian Hardware will lead the
hardware and home-improvement market in Australia.
 BSBMGT516 Facilitate Continuous Improvement

Strategic Direction: The Australian Hardware strategic directions are:

 Increase sales revenue and gross profit
 Maintain or increase market share
 Control direct and indirect operational costs
 Maintain superior product and service quality standards
 Establish Australian Hardware’s reputation as a socially and
environmentally responsible company.

Locations
Australian hardware is headquartered in Sydney, NSW. Australian
Hardware stores are located around Australia in the major cities and
in the larger regional centres. In areas experiencing growth in
population and significant growth in residential building, the demand
for products sold by Australian Hardware is considered likely to grow.
These areas are targeted by Australian Hardware for either expansion
of any existing stores or the building of a new store if none exists.

3. Research or review continuous improvement methodologies and tools

and identify strategies for improving quality and performance in
‘Operational Costs’.
a. A continuous improvement methodology
Lean Manufacturing combines five systems in one:
 Inventory control  Productivity improvement
 Set-up improvement  Quality improvement
 Maintenance improvement
Accordingly, a key focus of Lean Manufacturing is the reduction of
‘Seven Wastes’. Specifically:
 Over-production  Processing inefficiency
 Waiting or wasted  Motion
 Transportation  Defects
 Inventory

For Australian Hardware, the first and biggest hurdle is to reevaluate

what they view as waste. Typically in Australian Hardware, waste is
the label given to leftover scraps or unusable or defective products.
While these are two of the areas of waste identified in a lean system,
the idea of waste encompasses is needed to be recognized.

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 BSBMGT516 Facilitate Continuous Improvement

The way to readjust the perception of waste is to focus on the specific

steps that can be implemented to achieve a lean system. These steps
typically are:
1. Design a Simple Manufacturing System
This decreases the amount of inventory Australian Hardware
need to keep on hand, increases productivity since workers are
not juggling more product than they need and increases process
efficiency. If we can’t design a new one from scratch, we can
also reassess our current system to make it simpler.
2. Room for Improvement
Remember that anything that doesn’t add value to the customer.
The product should not be labeled as waste and be eliminated or
reduced. Chances are that there are always steps in the process
that can be eliminated to reduce waste.
3. Improve the System Continuously
A mindset that values continuous improvement and innovation is
essential to making the lean system work. By constantly
evaluating and reevaluating internal and external processes and
procedures, Australian Hardware can make large and small
improvements in a variety of ways that will ultimately impact our
bottom line.

Implementing the Five S’s

The next step of implementation involves the 5S system. These are
five specific areas that effectively prep Australian Hardware for the
changes it’s getting ready to make, each of which makes lean
implementation easier to do. The 5S methodology consists of:

Name Translation Description

Getting rid of clutter in the workplace, ensuring
1. Seiri Clearing
you only keep what’s truly necessary.
Organizing your remaining tools and materials
2. Seiton Organizing in the order of what you use most often. Make
them easy to access.
Cleaning working environment and machines
3. Seiso Cleaning
clean.
Integrating steps into process that will force
4. Seiketsu Standardization you to keep things cleared, organized and
cleaned.
Training must be conducted at every level of
5. Shitsuke Training
the organization for smooth implementation.

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Next, it is important to train all members of Australian Hardware in

the principles of lean to ensure a successful implementation. Just as
with any new process, all staffs must be willing to commit to a new
way of doing things. This is especially important for upper
management. Managers lead by example and need to understand the
changes being made in order to anticipate any problems.

b. Problem/opportunity identification and decision-making tools

Fishbone (Ishikawa) Diagram
The fishbone diagram identifies many possible causes for an effect or
problem. It can be used to structure a brainstorming session. It
immediately sorts ideas into useful categories. A Fishbone Diagram is
used when:
 Identifying possible causes for a problem
 A team’s thinking tends to fall into ruts
Fishbone Diagram Procedure includes:
 Agree on a problem statement (effect). Write it at the center right
of the flipchart or whiteboard. Draw a box around it and draw a
horizontal arrow running to it.
 Brainstorm the major categories of causes of the problem. If this
is difficult use generic headings:
o Methods
o Machines (equipment)
o People (manpower)
o Materials
o Environment

Environment Man Machine

Temperature
Training Poor maintenance

Labor Cost Motivation (Wage)

High Cost of Operation

Waste Management

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Standardization
Material Cost

Poor Quality Inventory control

Procedure

Material Method

c. Strategies for including and encouraging participation by the right

individuals and teams
Australian Hardware develops strategies for participation with these
two levels that are Interpersonal skills and participative culture.
Interpersonal skills include communicating verbally and non-verbally,
active listening, team problem solving, negotiating, advocating and
asserting values and group decision-making. Building participative
culture includes secure management commitment and value,
measure and reward participation.

d. Strategies for building ownership and a work culture that is conducive

to improve quality, reducing waste and high performance
In order to encourage participation, Australian Hardware implement
reward and recognition programs as they have been shown to
increase employee participation in improvement initiatives. Most of
the research in this area has shown that employees are happiest
when they are recognised by their managers for doing a good job.
While this may not be surprising, what is of significance is that
managers are often so busy they forget to fulfil this need for
recognition.

Recognition and incentives will depend on the size and nature of the
organisation. It can range from articles in a newsletter,
announcements at staff meetings, gifts such as wine and food, leave
and movie tickets, to incentive programs offering holidays. Use your
innovation skills to think of new ways to reward your team members.
You might even ask staff to suggest ideas. In making employee
recognition programs more effective, managers need to make sure:
 Appropriate rewards offered
 Reward employees in a timely manner

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 Reward ties in with the person’s results.

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4. Analyze the impact of the proposed introduction of continuous

improvement measures on the organization as an integrated whole.
a. Communications to various stakeholders
In its simplest form, a stakeholder communications plan
outlines who you need to communicate with, about what, how
you’re going to do it, and how often. There are also a few
important considerations such as timing and budget.
An effective stakeholder communications plan will:
 Support your organisation in achieving its stated goals
and objectives
 Support or improve your operational effectiveness
 Support or improve your relationships with those who
are important to ensuring your success (often called key
stakeholders or your target audience)
 Deliver measurable results to your organisation.
It is primarily a public relations plan (including media relations)
though it may include some wider communication tools such as
advertising and direct marketing where these support your
stakeholder communication objectives.

b. Knowledge management and information flow, including

information technology relevant to document storage and
sharing
The plan-do-check-act cycle of continuous improvement
involves the regular updating of strategic plans to
accommodate any identified improved process. Once an
improvement has been identified, it needs to be incorporated
into appropriate planning documents such as the organisation’s
business plan, the team’s strategic objectives and an
individual’s work plan.

The business or strategic plan will document the improvement

from an organisational perspective, describing how the
improvement will help the organisation meet its strategic
objectives by improving productivity, quality, reduced costs
etc., providing strategies to achieve the goals and allocating
sufficient funds in the budget to ensure its effective
implementation.

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An identified improvement must then be incorporated into the

team’s operational plan which outlines the rationale of the new
process or improvement, allocates human, physical and time
resources and provides strategies for monitoring and review.
Finally, the tasks and activities that will help to implement the
improvement are documented into each team member’s
performance or work plan, outlining responsibilities, available
resources, a timeline and performance measures.

c. Sustainability and sustainability objectives

A first step for many organisations to reduce the impact of
their operations on the environment is to develop sustainability
policies and procedures that help them to comply with national
and international environmental legislation; reduce waste;
encourage efficiency of water, electricity and paper usage;
purchase green products that are less damaging to the
environment; motivate staff; and encourage commitment from
the whole organisation.

Sustainability must now be considered a crucial part of any

continuous improvement process. When considering any
changes, organisations should refer to their sustainability policy
to ensure that all improvement processes meet sustainability
requirements.

Sustainability initiatives will depend on the size and type of the

organisation, the industry and the change being implemented.
The following is a comprehensive list of requirements that
should be addressed where applicable. Many of these should
be considered holistically as they all interrelate to reduce the
organisation’s ecological footprint; for example, a green office
program should incorporate all aspects of sustainability such as
green purchasing, strategies to reduce gas emissions, waste
management processes and the use of non- renewable
resources to improve organisational resource and energy
efficiency.

Sustainability requirements include:

 Regulations and social responsibility
 Environmental and resource sustainability initiatives

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 Waste management
 Waste treatment
 Ecological footprint
 Environmental management systems.

d. Performance management, including setting goals and KPIs,

monitoring, training and coaching, and rewards and recognition
KRA: Operational costs
KPI: Reduce operational costs by 10%
Measurement: Reduce cost over 6 months period
Monitoring: Operational expense report
Training: Deliver training using flexible delivery methods such
as online self-paced learning and an internet classroom link.
Training may be provided in the workplace or at an appropriate
alternative environment.
Rewards: Effective appraisal involves taking a number of steps:
 deciding what it is that you are appraising;
 choosing the best information source for
appraisal - who should appraise;
 deciding on a structure for the appraisal;
 being aware of the problems; and,
 carrying out the appraisal.

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