Appendix 1– Implement an innovative process

Educating for Excellence
AIC-UP- BSBMGT608–V3.0 Page 1 of 3
Australian Ideal College
RTO No.: 91679 CRICOS Provider Code: 03053G ABN: 15 126 592 756
Sydney Campus: Level 7 & 8, 75 King St, Sydney NSW 2000
Adelaide Campus: Level 3, 21-23 Rundle Mall, Adelaide SA 5000
Hobart Campus: Ground Floor, 116 Murray St, Hobart TAS 7000
Tel: +61-2-9262 2968 Fax: +61-2-9262 2938
Email: info@aic.edu.au Website: www.aic.edu.au
Appendix 1– Implement an innovative process
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.
Overview of the program
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 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 improving 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 re-tooling. 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:

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
Educating for Excellence
AIC-UP- BSBMGT608–V3.0 Page 2 of 3
Australian Ideal College
RTO No.: 91679 CRICOS Provider Code: 03053G ABN: 15 126 592 756
Sydney Campus: Level 7 & 8, 75 King St, Sydney NSW 2000
Adelaide Campus: Level 3, 21-23 Rundle Mall, Adelaide SA 5000
Hobart Campus: Ground Floor, 116 Murray St, Hobart TAS 7000
Tel: +61-2-9262 2968 Fax: +61-2-9262 2938
Email: info@aic.edu.au Website: www.aic.edu.au
● 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 over-estimate 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 as 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 disadvantaged is a
key concern 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
Make the following assumptions:
● 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.
● 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.
● The following comments were raised at a staff forum held two months after the implementation.
○ New machines are very different, training was not sufficient.
Educating for Excellence
AIC-UP- BSBMGT608–V3.0 Page 3 of 3
Australian Ideal College
RTO No.: 91679 CRICOS Provider Code: 03053G ABN: 15 126 592 756
Sydney Campus: Level 7 & 8, 75 King St, Sydney NSW 2000
Adelaide Campus: Level 3, 21-23 Rundle Mall, Adelaide SA 5000
Hobart Campus: Ground Floor, 116 Murray St, Hobart TAS 7000
Tel: +61-2-9262 2968 Fax: +61-2-9262 2938
Email: info@aic.edu.au Website: www.aic.edu.au
○ 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.