implement operational plan

implement operational plan

Learner Instructions 3

(Monitor operational performance)

Submission details

Students Name
Student ID
Group
Assessor’s Name
Assessment Date/s

The assessment task is due on the date specified by your assessor. Any variations to this arrangement must be approved in writing by your assessor.

Submit this document with any required evidence attached. See specifications below for details.

Performance objective

The candidate will demonstrate the ability to monitor operational performance.

Assessment description

In response to the scenario provided, you will implement a performance management system to monitor and manage the performance of an employee, including planning and role-playing a coaching session. You will then monitor performance of systems and processes, including budgetary control. Finally, you will prepare recommendations on the implementation of the operational plan, including recommendations for improvement.

Procedure

  1. Examine the scenario and supporting documents provided.
  2. Task A – Arrange a time with your assessor to role-play coaching session.
  3. Using performance data provided, monitor performance of individual.
  4. Plan and conduct coaching session for individual employee. In your session, ensure you address performance, use of resources and safety. Ensure you conduct coaching in the context of the organisation’s performance management system. Follow the performance management process outlined in policies and procedures with regard to:
    1. performance plans
    2. record-keeping (performance management plan).
  5. Task B – Using the data provided, monitor warehouse performance and performance systems. Analyse financial data to monitor financial performance.
  6. Using the results of your monitoring activities in step 5, develop 2–3 recommendations for improvement of operational plan or implementation of plan. Include:
    1. reference to performance of management systems
    2. reference to financial/ budgetary performance.

Note: Due to limited information available in simulated business scenario, recommendations may be provisional and depend on further investigation. For example, ‘COGS is outside of target range. Possible reasons for this issue are…possible courses of action to remedy the performance issue are…because…’

  1. Submit all documents required in the specifications below to your assessor. Ensure you keep a copy of all work submitted for your records.

Specifications

You must:

  • role-play coaching session
  • submit coaching plan (dated to show prompt action)
  • submit performance management plan
  • submit 2–3 recommendations on implementation of operational plan (as part of management report).

Your assessor will be looking for:

  • coaching and mentoring skills to provide support to colleagues
  • literacy skills to access and use workplace information, and to prepare reports
  • planning and organising skills to monitor performance and to sequence work of self and others to achieve planned outcomes.
  • knowledge of principles and techniques associated with:
    • methods for monitoring and reporting on performance
    • monitoring and implementing operations and procedures
    • problem identification and methods of resolution
    • relevant budgeting and financial analysis, interpretation and reporting requirements
    • resource management systems at the tactical implementation level
    • resource planning and acquisition
    • tactical risk analysis including identification and reporting requirements.

 

Candidate:  I declare that this work has been completed by me honestly and with integrity and that I have been assessed in a fair and flexible manner. I understand that the Institute’s Student Assessment, Reassessment and Repeating Units of Competency Guidelines apply to these assessment tasks. Signature: ___________________

 

Date: ____/_____/_____

Appendix 1 – Scenario: StorPlus Pty Ltd

StorPlus consists of three large supermarket distribution warehouses, which supply over 50 small to medium sized independent supermarkets and convenience stores throughout southeast Queensland.

StorPlus warehouses trade 7 days from 5 am to 5 pm. Each warehouse comprises a customer car park, delivery dock, dispatch dock, warehouse dry goods area, frozen goods area, five checkouts and an office complex and staff room. The business wholesales supermarket lines including dry food products, chemical cleaners, refrigerated foods, fresh and frozen produce, cigarettes, alcohol, etc.

The business uses a computerised resource management, distribution and point-of-sale system to monitor and control stock levels at each of three warehouses (Brisbane, Gold Coast and Caboolture). The main warehouse in Brisbane has an attached office space that accommodates senior management and head office administration staff.

Each warehouse employs approximately 20–30 people. Typically, the workforce of each warehouse comprises the following:

  • one warehouse business manager
  • picking and packing team, including manual loaders and unloaders, forklift drivers, etc.
  • distribution team, including drivers
  • checkout team.

Each team has one team leader. Payroll and accounting functions are managed at the Brisbane head office.

Task A

It is the middle of the 2012/2013 financial year, January 1. You are the warehouse business manager for the Caboolture warehouse. In order to implement operational plans, you will need to monitor the performance of team members with respect to those plans.

No performance reviews have been undertaken so far this financial year; therefore it is time to implement the six month review process as per the organisation’s performance management process.

The following data is available for the picking and packing team leader Pat Webb:

KRA KPI Target Result
Engage with customers. % of rejected orders.

 

 

Less than two complaints per 100 orders.

 

<1%Comment from team members: quality is really important to us and is stressed by the team leader!
Increase distribution capacity by 15% overall within financial year. Picking times.

 

5–10 minutes

 

7–15 minutes (weekday team).4–7 minutes (weekend team).
$ volume of orders handled by team. $500,000 $350,00020% of orders needing to be declined because of back log at ware house.

Workers are unsure how to use new machinery.

Control direct and indirect costs of operations within budget. $ expenses.

 

 

 

20% reduction in operating expenses. Only 5% reduction because of inappropriate overtime.Waste removal up 10%.
Engage workers with strategic goals of business and support professional development in line with strategic goals. (Targets to be set by individual managers). Hours of professional development and training on machinery provided for team. Five hours of professional development including coaching for each team member. No training

 

% of performance management processes carried out. Performance management processes should be carried out for all employees twice per year. Performance management on half of staff.Comment: I need to concentrate on output, not babysitting my team. I’m not really trained in performance management anyway
Improve health of employees (range of specific areas). Hours of OHS consultation 2 hours per quarter 1 hour to end of second quarter.Feedback: team leader thinks OHS is a joke.

You will need to:

  • complete a coaching plan and run a coaching session at the earliest possible time
  • complete a performance management plan to be sent to head office.

Task B

It is the middle of the 2012/2013 financial year, January 1. You will need to examine the performance of the warehouse with respect to operational/strategic plans in order to provide 2–3 recommendations. These recommendations will form part of the report the operations general manager will present to the CEO. Examine your own scorecard for the Caboolture warehouse performance as a whole:

KRA KPI Target Result
Engage with customers % of rejected orders. Less than two complaints per 100 orders. <1 complaint
Profile on survey. 20% rise in profile. 25% rise
% customer satisfaction with product line. 89%. 95%
Increase distribution capacity by 15% overall within financial year Picking times. 5–10 minutes. 4-15 minutes depending on team
$ volume of orders handled by team. $500,000. $350,00020% of orders needing to be declined because of backlog at ware house
Delivery times. 2–3 hours. 3-4 hours
Budget and income $ expenses including wages.

$ cost of goods sold.

 

$ revenue.

See budget variation report.

(25–30% of income).

See budget variation report.

See budget variation report.

 

See budget variation report.

Engage workers with strategic goals of business and support professional development in line with strategic goals. Hours of professional development and training on machinery provided for team. Five hours of professional development including coaching for each team member. No training in picking and packing team/ 2–3 hours in delivery and check out teams.
% of performance management processes carried out. Performance management processes should be carried out for all employees twice per year. Performance management on half of staff in all teams.
Improve health of employees. Hours of OHS consultation. 2 hours per quarter. 1 hour to end of second quarter across all teams.
Number of accidents requiring time off. <1 per quarter. Five this financial year.
Absenteeism. 10 days per quarter. 35 this financial year.

The business is particularly concerned about the cost of stock and wage expense affecting profitability.

You are required to develop 2–3 recommendations for the operations general manager to include in their report. Because, there may be a number of possible explanations for the performance data, your recommendations may be provisional and depend on gathering further information.

 

 

Appendix 2 – Business plan (excerpt)

From StorPlus business plan FY 2012/13

Mission

●      To provide the highest quality supermarket service to our valued wholesale customers.

Vision

●      To establish, within five years, the reputation of StorPlus as the premier supplier of independent supermarkets in southeast Queensland.

 

Values         

●      customer satisfaction and quality

●      innovation and continuous improvement

●      teamwork

●      high-performance

●      health and safety.

Strategic directions

The strategic context in which StorPlus will achieve its mission and vision is through:

●      engaging with customers

●      maintaining superior product line

●      increasing market share

●      increasing profitability through growth

●      growing distribution capacity

●      supporting innovative thinking, management and leadership skills

●      creating a high-performing organisation.

 

 

 

Appendix 3 – Budget

StorPlus 2012–13 Budget

 

Income:
Revenue $10,896,432 Sales of all products for the period.
Interest $187,000 Interest earned.
COGS $3,047,850 Cost of goods sold.
Total income $8,035,582 Gross profit.
Expenses:
Wages, salaries $3,567,890 Wages, salaries, superannuation, work cover insurance, payroll tax.
Consultancy fees $67,000 Development and maintenance of IT systems, accounting system, ERM system.
Communication expenses $56,000 Telephone, ISP costs, IT support.
Staff travel, transport and accommodation. $45,500 Cost of staff travel and associated costs for sales, etc.
Premises expenses $350,000 Rent, electricity, maintenance, cleaning.
Capital expenditure $589,000 Purchase of warehouse plant and equipment, vehicles, etc.
Depreciation and amortisation $277,569 Capital equipment that is depreciated.
Office supplies $78,068 Printing and stationery, postage, amenities.
Professional fees (consultants, legal and audit), insurances, taxes and charges, subs and memberships. $22,187 Audit fees, external accounting costs, bank charges, insurance except workers comp.
Total expenses $5,053,214
Surplus $2,982,368 Net income before tax.

 

Appendix 4 – Budget variation report

Prepared by M. Zhang

StorPlus
Budget Variation Report FY 2011/2012: Caboolture Warehouse
FY Q1 Actual Var %Var Q2 Actual $Var %Var
REVENUE                  
  Sales  3,200,000  800,000  780,000 (20,000) (3%)  800,000  801,000 1,000.00 0%
  COGS  800,000  200,000  206,000 6,000.00 3%  200,000  230,000 30,000.00 15%
GROSS INCOME  2,400,000  600,000  574,000 (26,000) (4%)  600,000  571,000 (29,000) (5%)
EXPENSES
General and administrative expenses
Travel  20,000  5,000  4,000 (1,000) (20%)  5,000  6,000 1,000.00 20%
Office supplies  5,000  1,250  1,000 (250) (20%)  1,250  1,000 (250) (20%)
Telephone  10,000  2,500  2,800 300.00 12%  2,500  2,800 300.00 12%
Repairs and maintenance  30,000  10,000  20,000 10,000.00 100%  10,000  25,000 15,000.00 150%
Payroll tax  50,000  12,500  16,250 3,750.00 30%  12,500  21,250 8,750.00 70%
Employment expenses
Superannuation  90,000  22,500  29,250 6,750.00 30%  22,500  38,250 15,750.00 70%
Wages and salaries  1,000,000  250,000  325,000 75,000.00 30%  250,000  425,000 175,000.00 70%
Staff amenities  20,000  5,000  6,000 1,000.00 20%  5,000  5,000 0.00 0%
Occupancy costs
Electricity  40,000  10,000  8,000 (2,000) (20%)  10,000  10,000 0.00 0%
Rent  100,000  25,000  25,000 0.00 0%  25,000  25,000 0.00 0%
Water  20,000  5,000  5,000 0.00 0%  5,000  5,000 0.00 0%
Waste removal  50,000  12,500  15,000 2,500.00 20%  12,500  15,000 2,500.00 20%
TOTAL EXPENSES  1,435,000  361,250  457,300 96,050.00 27%  361,250  579,300 218,050.00 60%

Appendix 5 – Operational plan

StorPlus operational plan

StorPlus operational plan (summary) FY 2012/2013
  Objectives: Performance measures Tasks:
1 Engage with customers:·         Raise organisational profile by 20 %.

·         Improve customer satisfaction performance by 10%.

·         Percentage of wholesale customers with overall positive view of StorPlus.·         Number of wholesale customer complaints (delivery times, product quality). ·         Conduct of quarterly wholesale customer surveys.·         Training needs analysis and training of employees, especially sales employees.

·         Continue to collect information from wholesale customers on desired/required:

o   stock items

o   delivery timelines.

·         Reduce quality variation.

2 Increase distribution capacity by 15% overall within financial year. ·         Productivity figures for individuals/ teamso   time to pick order

o   average time spent building skills/ building skills of others

o   time to load/unload vehicles

o   number of accidents spoiling goods

o   average delivery times from order to delivery.

·         Investigate resourcing needs for StorPlus: personnel, plant and equipment.·         Fulfil resourcing needs in accordance with policies and procedures.

·         Development of contingency planning.

3 Control direct and indirect costs of operations within budget. ·         General ledger accounts; financial statements:o   wages

o   cost of goods sold

o   $ value of wasted or spoiled items.

·         Renegotiate with suppliers.·         Research potential new suppliers.

·         Reduce expenses due to wastage.

·         Encourage management engagement with employees to achieve greater employee support of organisational goals.

·         Greater use by managers of budgets to encourage restraint in work teams.

4 Engage workers with strategic goals of business and support professional development in line with strategic goals. (Targets to be set by individual managers). ·         Percentage completion of performance plans and performance management process.·         Numbers of coaching sessions completed.

·         Numbers of operational – related training programs completed.

·         Management engagement with employees to achieve greater buy in of organisational goals.·         Regular coaching.

·         Training needs analysis and training.

·         Strategic goals included in induction program.

·         Employee incentives for improved performance and leadership (development of other employees in line with strategic goals of organisation).

5 Improve health of employees (range of specific areas). ·         Numbers of injuries (Target = 0)·         Numbers of absentees (Target = <3% of total hours. ·         Training need analysis and training on machinery.·         OHS committee meetings.

·         OHS Risk assessment conducted regularly.

·         Research possible introduction of OHS management system and employee wellness program.

·         Research incentives for: Safe work achievement; healthy lifestyle.

 

Appendix 5 – Organisational structure

StorPlus organisational structure

 

 

Appendix 6 – Performance management policy and procedures

StorPlus performance management policy

Purpose: The purpose of this policy is to ensure performance management is carried out consistently, fairly and transparently and in accordance with organisational requirements.
Scope: The scope of this policy covers the performance management process by employees and contractors of StorPlus
Resources: Specific procedures for the implementation of this policy are available below and on the company intranet.
Responsibility Managers/ team leaders will:●      carry out biannual formal performance review discussions

●      monitor individual performance throughout the year, recording key events, observations of importance which relate to the performance, both positive and negative

●      refer to the performance management guidelines when carrying out tasks related to the performance management system.

●      use the performance management documentation to record formal and informal performance reviews

●      provide employees with the opportunity to participate and contribute to their professional and personal development

●      provide employees with access to training and development, as reflected in the individual’s development plan

●      provide employees with coaching and development throughout the review period

●      provide employees with an opportunity to communicate their career development goals

●      ensure employees complete their responsibilities in accordance with the performance management policy and process.

 

Relevant legislation etc.: ●      Privacy Act 1998 (Cwlth)●      Anti-Discrimination Act 1991 (Qld)

●      Fair Work Act 2009 (Cwlth)

Updated/authorised: 8/8/2011 – Mary Zhang CFO

To conduct performance review

 

The employee’s performance will be monitored and evaluated regularly throughout the year. The performance review encompasses three elements:

  • an annual formal review discussion
  • a six month follow-up discussion
  • continuous monitoring of the employee’s performance.

 

  1. Annual discussion

The annual discussion is a key step in the performance review process. Essentially, this step involves compiling all the information collected and assessed throughout the year relating to the employee’s performance. However, there should be no surprises in this discussion; it is merely a summary and review of the informal and formal reviews conducted throughout the year.

The key elements of the annual discussion are to:

  • reflect on performance during the year
  • clarify key responsibilities of the role and review the job description
  • discuss successes as well as areas for improvement
  • set agreed targets and performance standards for the next six months
  • agree on key areas of development for effective performance in the role.

 

  1. Documentation

The performance review documentation provides an important guide to record standards set, targets and development plans. It is important to use the correct forms to maintain the integrity of the information, and to help the manager and employee ensure the review is completed correctly.

  1. Timing

Employee performance is to be formally reviewed every 12 months with a follow-up review in six months. A new plan should be completed at each annual appraisal discussion

  1. Six month follow-up discussion

The follow-up review provides an opportunity for managers and employees to re-visit targets, standards and development plans to:

 

  • establish that progress is on track
  • identify changes impacting on the achievement of targets and standards set
  • discuss development plan progress or establish development plan
  • modify standards and targets, if required.

 

To implement performance review process

 

 

Performance management plan template:

Name/position: Manager: Review period:
Reference from operational plan (objective) Key result area(strategic direction) Indicator of success/performance By when Done/reported
 

 

 

 

 

 

 

Learner Instructions 3

(Case study – Knowledge Test)

Submission details

Students Name
Student ID
Group
Assessor’s Name
Assessment Date/s

The assessment task is due on the date specified by your assessor. Any variations to this arrangement must be approved in writing by your assessor.

Submit this document with any required evidence attached. See specifications below for details.

Performance objective

The candidate must be able to demonstrate knowledge of the principles and techniques of continuous improvement.

Assessment description

Complete the test. It will take approximately 40 minutes.

Procedure

  1. Obtain the test and the case study from the facilitator.
  2. Read the case study (attached).
  3. Answer the questions in regard to the case study.

Specifications

You must provide:

  • Answers to test questions.

Your assessor will be looking for:

  • Answers which demonstrate an understanding of continuous improvement systems, techniques and tools.
Candidate:  I declare that this work has been completed by me honestly and with integrity and that I have been assessed in a fair and flexible manner. I understand that the Institute’s Student Assessment, Reassessment and Repeating Units of Competency Guidelines apply to these assessment tasks. Signature: ___________________

 

Date: ____/_____/_____

 

 

Question 1:

  1. Define continuous improvement as implemented by ACME.
  2. Name four or more elements of continuous improvement ACME implemented.
  3. Who was involved in the process (which stakeholders)?
  4. What did ACME do to enable the continuous improvement implementation to succeed?

 

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 

Question 2: Describe how the vision and goals of ACME helped develop the culture of continuous improvement (what drives a continuous improvement culture?).

 

 
 
 
 
 
 
 
 
 
 
 

 

Question 3: How will achieving its KPIs help ACME improve customer satisfaction (what do ACME’s customers want)?

 

 
 
 
 
 
 
 
 
 
 
 

Question 4: What tools were used to undertake the analysis carried out by ACME described in the case study? Why were these tools appropriate?

 

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 

Case Study:  Continuous improvement at ACME Steel

Introduction

The steel manufacturing company ACME focuses on meeting the needs of its’ customers and providing innovative solutions. ACME manufactures, processes and distributes steel products worldwide.

Steel is everywhere in our homes and all around us. The key markets for ACME include construction, energy and renewables, engineering and machinery, mining and earthmoving equipment, shipbuilding, fastenings and rail.

The principle manufacturing site in Australia is a plate mill site employing 5,500 people. The site consumes 3 million tonnes of iron ore and 1 million tonnes of coal each year to produce 2.1 million tonnes of steel products.

ACME products go into a range of leading edge developments:

 

Rail Main supplier to major rail networks in including train services.
Steel sections Wide ranging construction projects – e.g. warehousing, shopping centres, hospitals, tower blocks, bridge components, stadia, machinery.
Steel rods Everything from paperclips and bolts, to bed springs, wire (for fencing and agriculture) and tyre cord (for strengthening vehicle tyres).
Steel plates Construction and mining machinery, bridges, major construction projects, tanks and pressure vessels. Steel plate is also used in harnessing renewable energy such as in wind turbine towers.

 

 

 

 

 

 

 

 

 

 

 

Modern steel production is a large-scale operation dealing in huge quantities of materials and products. The process of steel plate production has several stages:

  • receipt of pre-cut steel slabs from the steel plant
  • reheating of slabs
  • rolling to achieve required dimension and mechanical properties
  • initial inspection for surface or quality defects
  • cutting to order size
  • marking with unique identities
  • cold levelling to agreed flatness standard
  • final inspection
  • loading and despatch to customer.

Producing large volumes helps to drive down the costs of running a huge and expensive steel plant. Overall, this results in steel being a relatively inexpensive product, typically around $1.50 per kilogram, about the same as a kilogram of potatoes!

In a major building project, such as a shopping complex, the cost of the steel can be as little as 5% of the overall cost of the project. Because of these issues, ACME needs to differentiate its business from its competitors in order to continue to grow.

ACME’s business strategy is to produce quality steel to satisfy customer requirements, focusing on delivering products at the right time in order to secure profitable business. A key challenge is to meet the increasing demands for more steel, at increasing levels of quality and to comply with more demanding delivery requirements. It would be straightforward to meet these challenges using brand-new facilities. However, a new ‘Greenfield site’ steel mill could cost more than $900 million to build. ACME therefore needs to make process efficiencies and quality and delivery improvements with its existing manufacturing plant. This presents challenges when older facilities are not well structured to use modern manufacturing techniques and resources.

This case study focuses on the process of continuous improvement (CI) at the ACME steel plate manufacturing mill. It will show how ACME is finding new ways of achieving its objectives from existing resources.

Continuous improvement

Continuous improvement is often referred to by the Japanese word ‘Kaizen’. Kaizen means ‘change for the better’ and covers all processes in an organisation. These include engineering, IT, financial, commercial and customer service processes, as well as manufacturing. CI involves making continual small improvements to a process rather than big changes at irregular intervals. This requires close monitoring and control, changes to the uses of manpower, machinery, methods, materials and money to improve business efficiency.

Continuous improvement starts with management and under their leadership works down through the organisation. The underlying theme is that everyone is responsible and has a part to play in making improvements. All employees must work together to identify the steps needed to improve working practices. Planning meetings help teams to focus on satisfying customer needs. Visual management techniques, such as flow charts and wall charts make clear what resources are necessary and who is responsible for each part in the process.

Everyone has the opportunity to eliminate waste. This is any activity or process that does not add value. A key question to define waste is ‘would a customer pay for that process?’

There are seven main areas of waste for any business:

  • Transportation – moving materials or products about.
  • Inventory – keeping too much or the wrong stock.
  • Motion – people moving or travelling excessively.
  • Waiting times – allowing products to wait for processing.
  • Overproduction – making too much.
  • Over-processing – doing too many processes during manufacture.
  • Defects – errors or flaws in the product causing rework or needing to be scrapped.

Production processes that minimise waste are referred to as ‘lean production’. In these processes, the aim is to use less of everything, for example, space, materials or time.

The plate mill plant is looking to reduce waste in its manufacturing process. It has adopted the concept of ‘flow’. This means that the products are ‘pulled’ through the process according to customer demand. All parts of the production process, from the supply of raw steel (slab) to the finished steel plate, are carefully planned. Scheduling for each element of the process ensures that bottlenecks are kept to a minimum. Each process is paced to control the amount of product in each stage of the process. This ensures that processes operate smoothly without overload or delay and keep the desired output and quality.

Tonnage was the traditional key measure of productivity for ACME. For employees to work to a smooth paced process it needed a significant culture change.

Implementing a continuous improvement culture

CI needs team work. In the plate mill plant, a CI manager coordinates the process. 40 CI coaches chosen from the workforce received training to facilitate improvements. ACME put together a ‘toolbox’ of techniques which the coaches use with managers, employees and operators. These help everyone understand where and how they can improve their work. A CI culture means that everyone can put forward ideas and have a say in how processes can change for the better. This is known as engagement.

An organisation needs to know where it is going in order to be able to put in place the resources it needs to achieve its plans. This is set out in a vision. ACME plate mill has set out a five-year vision improvement plan which will help in the process of developing a CI culture for the business. Everyone in the organisation has to understand and actively support the plan. Workshops for all employees have taken place to explain the vision and why the change is necessary if ACME is to remain competitive.

Helped by the CI coaches, workers have drawn maps of their processes. These show the links between the stages of manufacturing as well as what information flow is needed. The maps show:

  • details of tonnages
  • number of products
  • rework cycles
  • inspection points
  • stocks
  • delays

The first part of this process is a ‘current state value stream map’. This shows what the systems and processes are like now. The next stage considers what the ‘future state map’ would look like. This highlights what ACME needs to do to achieve this state, for example, investing in new processes, equipment or additional staffing. ACME plate mill has 16 system maps. These link to each other to give an overview of the whole process.

For each of the 16 systems, a number of rules about stock levels and stock rotation have been set up:

  • Stock rotation ensures that the plates for one customer do not become buried beneath others and therefore delayed.
  • The required amount of slab steel (‘feedstock’) must be in front of the mill by the Tuesday of the week in which the material is to be rolled.
  • By rolling plates in the planned week, the mill is properly paced and all ‘downstream’ processes (such as cutting, levelling and inspection) can be scheduled accordingly.

Using the value stream maps has helped ACME to improve process flows and the working environment. It has also reduced unnecessary motion, transport and processing. By taking these small steps and involving everyone in the vision, the delivery of product has increased from 70% of plates on time to 92% on time.

Target setting

CI working requires everyone to think differently about the way they work. It was recognised that people might be resistant and cling on to old ways of working. The key was getting all workers to see change as their responsibility. The CI coaches support the teams and individuals and promote or ‘champion’ new ways of working. Over time, the team and individuals are empowered to take responsibility and make decisions for themselves.

To help workers accept the changes, the five-year plan established a timeline for the programme of introducing change.

 

 

 

Year

2007

2008

2009

2010

2011

Nature of attitudes to change within the organisation Resistant(workers resist change) Adaptive(workers begin to adjust to new ideas) Accepting(workers start to apply new methods) Embracing(workers recognise the benefits of change) Performing(new ideas are fully adopted by the workers)
Expertise and responsibility for CI CI coaches Champions and change managers Manufacturing and process managers Team leaders The team

 

An important part of the continuous improvement programme was the creation of Key Performance Indicators (KPIs). Previously, measures at ACME were largely based on tonnes of steel rolled. This did not show whether it met customers’ needs or whether the steel needed reworking because it didn’t meet customer requirements.

ACME has set new KPIs which focus on meeting customer deadlines, such as:

  • A zero backlog of customer orders – this means customers always get their deliveries on time.
  • Meeting targets for rolling steel plate in its allotted week.

ACME monitors and measures how its operations compare with other producers and competitors in the steel industry. This process of benchmarking means that ACME is continually reviewing its activities to achieve best practice. ACME shares relevant information both within and across ACME to drive improvement. It also spreads appropriate technical knowledge and information across the steel industry through international groups such as the International Iron and Steel Institute.

The benefits of continuous improvement

There are significant costs involved in setting up a continuous improvement programme, including:

  • allocating employee time to participate in group work
  • training coaches
  • setting up a manual of tools and techniques.

However, ACME is already seeing the benefits of CI with:

  • reduced waste through lean production
  • improved product quality
  • reduced rework time
  • faster response times, giving more customers their orders on time
  • becoming more competitive by driving down costs
  • retaining/gaining customers through innovative products and services.

KPIs show that the plate mill is achieving its targets for rolling steel in planned weeks and is delivering almost 100% of customers’ orders complete and on time. ACME Plate Mill aims to have all orders complete and on time by March 2009, while at the same time reducing lead time.

The principles of team working help to create a more flexible workforce. This gives ACME the capacity to increase or change production when necessary. In addition, ACME employees are more likely to be satisfied and motivated when they feel that they are making a contribution. They can see their expertise helps to create a more effective company. By empowering its workers, ACME gains a more committed workforce which helps to drive further improvement.

Conclusion

ACME is transforming production at its plate mill plant through continuous improvement. This way of working encourages all employees to behave as team members to identify and support work improvement opportunities. Increasingly employees at every level are making improvement their responsibility, which provides employee job satisfaction.

Continuous improvement helps ACME to provide quality products and services for customers with on time delivery. CI supports ACME’s aim to achieve satisfied customers and secure repeat sales and longer term orders. It is part of a long term strategy based on service to develop the business. It aims to improve operational demands to fulfil customer expectations and out-perform competitors.

 

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