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Elements and Performance Criteria

1. Identify the major cost components of product or process in own work area
   • Identify cost components in the product or process in own work area.
   • Recognise the impact of current or alternative actions on costs.
2. Identify constraints to cost-efficiency
   • Identify required production/process rate and major costs.
   • Identify costs factors under individual or team control.
   • Relate identified costs factors to impact on overall cost of production/process.
   • Identify cost factors that are a constraint to cost-efficiency in own work area.
3. Apply cost-efficient work practices
   • Identify and explain to relevant people the implications of possible actions/changes to improve cost-efficiency in simple financial terms.
   • Identify non-financial implications of proposed changes in discussion with relevant people.
   • Select actions which minimise overall costs.
   • Monitor actions to ensure cost-efficiency in own work area is maintained.

Range Statement

This field allows for different work environments and conditions that may affect performance. Essential operating conditions that may be present (depending on the work situation, needs of the candidate, accessibility of the item, and local industry and regional contexts) are included.
Competitive systems and practices include one or more of:	lean operations agile operations preventative and predictive maintenance approaches 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.
Cost components include all of:	fixed and variable costs, such as power/energy, materials, plant and equipment, production or process time, including impact of salary and wages office expenses, such as telephone and internet government taxes and charges.
Process includes one or more of:	production maintenance logistics office other support processes in an organisation.
Overall cost includes all of:	the assessment of negative and positive financial implications negative long-term issues, such as work health and safety (WHS), environmental and regulatory issues.

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Performance Evidence

Evidence required to demonstrate competence in this unit must be relevant to and satisfy the requirements of the elements and performance criteria and include the ability, on one (1) or more occasions to use cost factors in making a decision related to their workplace, and to:

identify major cost components

distinguish components which they can control from those they can’t

make decisions which minimise overall cost and explain these to stakeholders.

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Knowledge Evidence

Must provide evidence that demonstrates knowledge relevant to their job role sufficient to fulfil their job role under routine only supervision, including:

concepts of expense, income and capital

fixed and variable cost components relevant to own work:

power/energy

materials, plant and equipment

production or process time, including impact of salary and wages

office expenses

government taxes and charges

relative impact of each of these

financial and non-financial impacts of cost reductions

the difference between internally and externally controlled costs

difference between overhead, labour and consumables.

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