Manage operational

Manage operational

Develop operational plan

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 skills and knowledge required to develop operational plans in consultation with key stakeholders.
Assessment description
In response to a simulated business scenario, you will research resource requirements and develop an operational plan in consultation with relevant stakeholders. As a

part of the development of your plan, you will set performance indicators, plan for contingencies, and obtain approval in accordance with organisational requirements.
Procedure
1.    Read the BBQfun simulated business information provided in Appendix 1 of this task and in the Appendices of your Student Workbook.
2.    Research resource requirements for implementation of e-commerce strategy.
3.    Arrange with your assessor to participate in two resourcing consultation role-plays.
4.    During role-plays, consult with relevant personnel to determine resourcing needs:
a.    Sales and Marketing Manager (prepare to discuss human resourcing requirements)
b.    Technology consultant (prepare to discuss physical resourcing requirements related to development of e-commerce website).
Note: During consultation, ask questions and encourage interviewee to provide information.
5.    Using appropriate word processing or project management software, develop an action plan for the implementation of the e-commerce strategy. Include:
a.    physical resourcing (all major steps for resourcing, including procurement of different types of resources, but not to the detail of including all procurement

steps for each resource type)
b.    human resourcing (all major steps, e.g. recruiting, training, communication)
c.    timelines and milestones for implementing ecommerce strategy
d.    consultation and communication (ensure all affected staff are informed and engagement is encouraged for all stakeholders)
i.    an example action plan template is provided
ii.    ensure plans adhere to organisational requirements such as policies and procedures.
6.    Develop performance indicators for operational and financial targets and amend existing operational plans to include KPIs and financial targets related to e-

commerce strategy. Develop balanced scorecard for e-commerce sales and customer service representative including three KPIs and associated targets.
Note: The current budget and operational plan for BBQfun is located in Appendices 2 to 3 of this task.
7.    Identify at least three risks to the implementation and develop a contingency plan for each risk.
a.    Include at least one risk due to inefficiency or wastage.
b.    Include at least one risk due to employee underperformance.
8.    Develop a proposal for resourcing to be presented for approval to the Operations General Manager. Include in your proposal:
a.    breakdown of costs
b.    benefits to organisation
c.    risks to organisation by not implementing
d.    outline of identified risks and contingency planning
e.    description of proposed implementation of  resourcing
f.    description of sources of information used to develop proposal (use internet research on technical aspects of ecommerce and importance to retailers; use

consolation, use company financial projections).
9.    In a third role-play, present proposal for approval by Operations General Manager.
10.    Submit a portfolio of your implementation documents as outlined in the specifications below. Keep copies of your work for use in Assessment Tasks 2
and 3 and for your own records.
Specifications
You must:
●    participate in three role-plays:
○    Sales and Marketing Manager
○    Technology consultant
○    present resourcing proposal for approval
●    submit planning portfolio, including:
○    action plans
○    performance indicators for operational and financial targets (amended operational plan; balanced scorecard for e-commerce customer service representative)
○    proposal for resourcing.
Your assessor will be looking for:
●    literacy skills to access and use workplace information and to write a succinct and practical plan.
●    technology skills to use software to produce plans
●    planning and organisational skills.
●    numeracy skills to allocate and manage financial resources.
●    knowledge of models and methods for operational plans.
●    knowledge of budgeting processes.
●    knowledge of alternative approaches to improving resource usage and eliminating resource inefficiencies and waste.
Adjustment for distance-based learners
●    No variation of the task is required.
●    A follow-up interview may be required (at the discretion of the assessor).
●    Documentation can be submitted electronically or posted in the mail.
Appendix 1: Scenario – e-Commerce strategy
Background to scenario
The BBQfun Board of Directors and CEO have decided to implement an e-commerce strategy to maintain or increase market share and revenue and satisfy customer needs in

line with company strategic directions.
Under the strategy, BBQfun would offer all products in an online store. Stock could be stored at no extra cost at existing stores. Customers would cover delivery

costs.
Currently, BBQfun has a website, but this website lacks e-commerce functionality. The website would need to be redeveloped to incorporate this functionality in line

with relevant technical specifications. Existing infrastructure, such as office and store configurations, would need to be adapted to the new strategy. Additionally,

assets, such as delivery vehicles would need to be acquired. New staff would need to be recruited and existing staff retrained or informed of the e-commerce strategy

and associated operational and performance targets.
All resourcing must be acquired and operations undertaken in accordance with relevant external standards, such as legislation and codes of practice, and internal

standards, such as organisational policies and procedures.
Preliminary approval has been given to amend existing budget and operational planning to incorporate this strategy.
It is now 30 June 2012 and e-commerce operations are expected to be underway by 1 October 2013.
Scenario task
You will need to determine physical and human resourcing. Review organisational documentation and undertake preliminary research on e-commerce. Consult with relevant

personnel to determine resourcing needs:
●    Sales and Marketing Manager
●    Technology consultant.
You will then need to plan physical and human resourcing and establish associated performance measures and targets. You may consider the Management Team of BBQfun,

including team leaders in warehouses, to be resources for the implementation. Use description of their roles in operational planning when assigning responsibilities.
Finally, you will need to propose resourcing and associated operational changes to the Operations General Manager, who will, in consultation with the CEO and Board of

Directors, provide approval.
Resourcing and budget: e-Commerce strategy
After consulting with the management team at BBQfun, you determine:
●    eight online sales and customer service people will be needed to manage increased online customers
●    since stores are overstaffed, need for four online people could be met from drawing from existing employees at the two stores
●    no current staff have any online customer service skills
●    management would like to develop people through re-training rather than hire new staff to handle online sales
●    six delivery trucks needed to enable distribution
●    e-commerce website will take 50 days to develop
●    three forklifts are needed
●    four additional warehouse workers are needed
●    six additional drivers are needed
●    office space will need to be reconfigured.
The following operational costs are associated with e-commerce business strategy.
Costs: e-Commerce strategy (initial investment)
Resources    Costs
Plant and equipment    ●    Delivery trucks $50,000 x 6 = $300,000
●    Forklifts $10,000 x 3 = $30,000
Promotional costs    $300,000
Website developers    Contractors $2,000 x 50 = $100,000
Staff training     Online customer service training $3,000 per staff member = $24,000
Recruitment costs    30,000
Management change leadership training for store managers and team leaders    $3,000 each = 1 Brisbane store manager, 4 Brisbane team leaders, 1 Gold Coast store

manager and 3 Gold Coast team leaders x $2,000 = $27,000
Warehouse and office reconfiguration    $50,000
Total    $861,000
In addition, ongoing staff costs will be incurred.
The expected life of the initial investment is expected to be three years.
Costs: e-Commerce strategy (ongoing)
Resources    Costs
Additional staff    $40,000 year average = (4+4+6 ) x $40,000= $560,000 per year for 3 years =$1,680,000
The following expenses should be incurred in the 2013 financial year and be included in associated financial targets for spending:
Additional staff    $400,000
Additional marketing    $300,000
Additional training    $51,000
Recruitment    $30,000
Benefits to business
According to financial projection prepared by the CFO, the business expects the proposed strategy to be profitable over three years.
Profitability index over three years

Profitability index (PI) =    Present value (PV) of future cash flows
Present value (PV) of initial investment
PI>1 indicates project should be undertaken
2013    2014    2015
Cash flow from operations (minus ongoing operational costs associated with ecommerce such as additional staffing)     $200,000    $500,000    $800,000
Present value of future cash flows (discounted future cash flows with respect to opportunity cost, inflation)    $180,000 +$420,000+$600,000 = $1,200,000
Present value of initial investment    $861, 000
Profitability index     1.39

The expected additional profit for 2013 would be $200,000. This figure should be added to targets.
Risks to implementation
After consulting with stakeholders at BBQfun, you determine:
●    medium risk of poor online sales
●    high risk of customer service quality problems for online customers
●    high risk of staff misunderstanding changes and considering online sales as threat to jobs
●    medium risk of not being able to recruit fully trained online staff
●    medium risk of wastage due to overstocking product in anticipation of increased online sales.
All additional costs associated with contingency planning will be approved in accordance with BBQfun policies and procedures.
Appendix 2: Example budget summary
BBQfun 2012–2013 Approved budget by activities to be undertaken
Income:
Sales    $11,000,000    Barbecues and related equipment.
Investment income    $1,567,000    Real estate investment income and rental of office space.
Cost of goods sold (COGS)    $5,890,000    Cost of provision of goods, purchase of stock, distribution.
Gross profit     $6,677,000    Gross profit.

Expenses:
Wages, salaries and on costs    $2,567,890    Wages, salaries, superannuation, work cover insurance, payroll tax.
Consultancy fees    $50,000    Project management: WHS management system; change management.
Communication expenses    $42,000    Telephone, ISP costs, IT support.
Marketing     $920,000    Cost of staff travel and associated costs for sales, etc.
Premises expenses    $1,000,000    Rent, electricity, maintenance, cleaning.
Insurance    $120,000    Liability insurance
Depreciation and amortisation    $177,569    Computers and capital equipment that is depreciated.
Office supplies    $65,068    Printing and stationery, postage, amenities.
Training    $62,187    Sales training: leadership, WHS, ethical/legal training.
Total expenses    $4,884,714
Net profit    $1,792,286    Net income before tax.

Appendix 3: Example operational plan
General operating hours
BBQfun operates Monday to Friday from 9 am to 5 pm. BBQfun will be operational year round except legislated holidays.
Human resources
Pat Mifsud, CEO
Pat is responsible for working with the Board of Directors to oversee the business, set overall strategic directions, manage risk, and authorise large financial

transactions.
Riz Mehra, Chief Financial Officer
Riz is responsible for preparing quarterly financial statements and overall budgeting. Riz is also responsible for overseeing budgets for cost centres and individual

projects. At completion of financial quarters and at the end of projects, Riz is responsible for viewing budget variation reports and incorporating information into

financial statements and financial projections.
Kim Chen, Operations General Manager
Kim is responsible for the day-to-day running of the company. Kim oversees the coordination of all operations. Kim is responsible for sponsoring projects that affect

operations of the organisation as a whole. Kim works with the HR Manager to coordinate systems and projects to achieve company-wide synergy.
Les Goodale, Human Resources (HR) Manager
Les is responsible for the productive capacity and welfare of people at BBQfun. With the Operations General Manager, Les works to coordinate projects and management

systems, such as performance management, recruitment and induction.
Sam Lee, Marketing Manager
Sam is responsible for the management of all aspects of marketing. Sam manages the activities of the Marketing Team.
Pat Sweeney, Manager: Brisbane (Kenmore)
Pat is responsible for the management of all aspects of the Brisbane store.
Alex Mitchell, Manager: Gold Coast
Alex is responsible for the management of all aspects of the Gold Coast store.
A summary of human resources at each of the two locations appears below:
Brisbane: Head office
●    Employees:
○    30 full-time and casual sales and customer service people, check-out staff trained in use of POS (integrated with ERP and CRM software system)
○    senior management team (five) + one store manager
○    four sales team leaders
○    one delivery truck driver
○    one warehouse worker.

Gold Coast operation
●    Employees:
○    30 full-time and casual sales and customer service people, check-out staff trained in use of POS (integrated with ERP and CRM software system)
○    one store manager
○    three sales team leaders
○    one delivery truck driver
○    one warehouse worker.
Office requirements
The office space is leased and will accommodate the necessary office equipment, such as computers, fax machine, photocopier and other engineering equipment.
Brisbane: Head office
●    Location: Kenmore.
●    Size: 15,000 square metres (50% warehouse, 50% display area). Warehouse area used at 45% of capacity, but poorly configured to accommodate heavy increase in

distribution traffic.
●    Large mezzanine office space (used to be occupied by online retailer, currently subdivided and occupied by Management Team).
●    Loading bay with large capacity (most of area incorporated into customer display area, could be easily and cheaply reconfigured to accommodate extra

distribution).

Gold Coast operation
●    Location: Robina.
●    Size: 12,000 square metres (50% warehouse, 50% display area). Warehouse area used at 50% of capacity, but poorly configured to accommodate heavy increase in

distribution traffic.
●    Large mezzanine open-plan office space with separate access (was previously rented out to a telemarketing company).
●    Lots of spare office space.
●    Loading bay with large capacity.
Operating capital requirements
BBQfun requires approximately five million dollars in working capital to sustain and ensure the business meets all opening and ongoing financial obligations.
The company may experience financial pressures during slow sales periods.
A long-term strategy to maintain a positive cash flow during these periods will be to diversify the company’s product range and develop business opportunities such as

e commerce to boost sales and sales capability overall.
Operational expenses
Wages, salaries and on-costs    $2,567,890
Consultancy fees    $50,000
Communication expenses    $42,000
Marketing     $800,000
Premises expenses    $1,000,000
Insurance    $120,000
Depreciation and amortisation    $177,569
Office supplies    $65,068
Training    $62,187
Total Expenses    $4,884,714
Insurance requirements
BBQfun will have to incur costs for business liability insurance. The estimated cost for this requirement is $100,000 per year.
Operational workflow
1.    Conduct market research to determine needs.
2.    Negotiate with suppliers.
3.    Receive and warehouse products.
4.    Provide service and information to warehouse customers.
5.    Receive payment.
6.    Arrange delivery of items (if required).
BBQfun accepts cash, EFTPOS and major credit cards. Credit terms are available for trades.

Operational plan (with strategic objectives, measures and tasks) FY 2012–2013
BBQfun Operational Plan (with strategic objectives, measures and tasks) FY 2012–2013
Objectives:    Performance measures    Tasks:
1    Engaging with customers through marketing, research and personalised service    ●    Completion of market/marketing research.
●    Completion of customer surveys.
●    Completion of reports to identify marketing opportunities.    ●    Conduct of quarterly surveys on customer satisfaction.
●    Evaluation of market and marketing data to determine marketing opportunities.
2    Building reputation for quality products and quality customer service:
●    Raise organisational profile by 20%.
●    Improve client satisfaction performance by 25%    ●    Percentage of brand recognition in sought-after categories in periodic customer surveys.
●    Percentage of customers with positive view of organisational responsiveness, innovation, quality, ethics, safety.
●    Number of customer complaints.
●    Delivery times.
●    Number of returned items.    ●    Audit of supplier quality.
●    Regular contact with suppliers.
●    Investigate resourcing needs: people, products.
●    Fulfil resourcing and distribution needs in accordance with policies and procedures.
●    Maintenance of enterprise resource management (ERP), point of sale (POS) and customer relationship management (CRM) systems.
3    Supporting people to perform via training and performance management    ●    Numbers of injuries
(Target = 0).
●    Numbers of absentees
(Target = <3% of total hours).
●    Anti-discrimination complaints (Target=0).
●    Percentage completion of performance plans and performance management process.
●    Numbers of coaching sessions completed.
●    Numbers of operational-related training programs completed.    ●    Research effectiveness of possible incentives for: safe work achievement; healthy

lifestyle.
●    Engage workers with strategic goals of business and support professional development in line with strategic goals. (Targets to be set by individual managers).
●    Management engagement with employees to achieve greater buy in of organisational goals.
●    Include explanation of how activities work with organisational strategic goals in all communications to internal personnel.
●    Regular coaching.
●    Training needs analysis and training (leadership, WHS, ethical/legal training).
●    Strategic goals included in induction program.
●    Employee incentives for performance in all areas relevant to operational and strategic goals.
4    Increasing sales revenue     General ledger accounts; financial statements:
●    Revenue target = $11 million
●    Profit target = $1,792,286    ●    Marketing campaigns.
●    Sales training for floor staff.
5    Reduce direct and indirect costs of operations     ●    General ledger accounts; financial statements:
○    wages
○    cost of agent services
○    consultancy fees
○    wastage and associated expenses.
●    Expense target = $4,884,714
●    COGS target = $5,890,000    ●    Renegotiate with suppliers.
●    Research potential new suppliers.
●    Research new distribution possibilities, such as e commerce/delivery.
●    Management engagement with employees to achieve greater employee support of organisational goals.
●    Greater use by managers of budgets to encourage restraint.
●    Greater focus on budget restraint in management of projects/activities.
●    Inventory management through ERM to reduce overstocking and risk associated with storage.
●    Incentives (as part of manager/employee performance management and bonus system).
Appendix 4: Action plan template
Milestone: Action and/or objective
(to achieve strategic aims of physical or human resourcing)    Date    Person responsible    Budget or resources where applicable)Appendix 5: Balanced scorecard

template
KRA    Target     KPI    Result
Appendix 6: Contingency plan template
Contingency Plan
Company name: BBQfun
Name of person developing the plan:
Who was consulted as part of this plan?
Name    Position Risk identified:
Strategies/activities to minimise the risk    By when    By whom

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