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.

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
• Hardware
• Tools
• Paint
• Housewares
• Outdoor
• Garden

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.

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
• Set-up improvement
• Maintenance improvement
• Productivity improvement
• Quality improvement

Accordingly, a key focus of Lean Manufacturing is the reduction of ‘Seven Wastes’. Specifically:

• Over-production

· Waiting or wasted

• Transportation
• Inventory

· Processing inefficiency

• Motion
• Defects

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.

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:

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

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
• Reward ties in with the person’s results.

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.

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

• 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.

Part C: Portfolio of work

1. Develop a communications strategy for implementing your proposed continuous improvement initiatives

Statement of Purpose

The communications strategy shows how effective communications can:

· Help us achieve our overall organizational objectives

• Engage effectively with stakeholders
• Demonstrate the success of our work
• Ensure people understand what we do
• Change behavior and perceptions where necessary.

Operational Objectives and Communications Objectives

Identifying Stakeholders

In this section, we give a detailed description of our main audiences – both external and internal. These might include the public, politicians, customers and staff. We also refer to potential audiences that our organization is keen to connect with. Here at Australian Hardware, internal communications is a crucial part of any communications strategy.

Methods of Communication or Media

Meetings : One of the most common ways to communicate. We can vary from only 1 person to thousands based on message and audience appropriate. It is up to you to maximize every minute of the time spent to have dialogue. Make sure it is a dialogue and not a monologue. It is the best way as we have the verbal and non-verbal cues that enhance the communication and avoid misinterpretation.

Newsletters/ Email/ Posters: This strategy is one-way communication and utilizes emailed updates, hard copy brochures, and posters, newsletters mailed or emailed. One of the weaknesses is that messages are delivered and we cannot gauge if they were read and understood, deleted, as sometimes there is no feedback. That immediate feedback is valuable for strengthening our message and making sure impacts and feedback are quickly received.

2. Develop a short procedure for informing teams of the outcomes of continuous improvement activities

To address internal communication among the various levels of Australian Hardware and the issue of receiving, documenting and responding to the outcomes of continuous improvement activities.

Procedure

1. Senior management is responsible for coordinating the communication of the outcomes of continuous improvement activities and other issues concerning the operational continuous improvement of Australian Hardware to their staff. Senior management is responsible for communicating roles and responsibilities for the continuous improvement of operational system.

2. Internal communication may include, but are not limited to:

o Electronic mail

o Staff meetings

o New employee training

o Bulletin board and posters

o Memoranda and employee letters

o Newsletters, articles