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BSBMGT517 Manage operational plan Assessment 1

Develop an operational plan

Performance objective

You will show skills and knowledge required to develop operational plans in consultation/discussion with key stakeholders/interested parties/others

Assessment description

In response to a simulated/pretend business scenario/plan, you will research resource/items requirements and develop (or amend) an operational plan in consultation/discussion with related / concerned stakeholders/people. As a part of the development of your plan, you will set performance indicators/goals, plan for other possibilities and get approval in accordance/in line with organisational requirements.

Procedure

  1. Read the BBQfun scenario information provided in Appendix 1 and the BBQ fun simulated/pretend business documentation provided by your assessor.
  2. Write a brief summary of the BBQfun operational environment that includes:
    1. an outline of the legislative and regulatory (government and industry rules) context/situation that is relevant to BBQ fun’s operational plan (available on pages 16–18)
    2. an outline of the BBQfun policies and procedures that directly relate to the operational plan
    3. an explanation of the role of an operational plan in achieving the successful implementation/setup of the e-commerce strategy
    4. a discussion of your intention to either develop a new operational plan for BBQfun, or to amend the existing operational plan; support your discussion with reference to different methods and models for developing operational plans – such as methods for setting goals, outlining actions, identifying risk and monitoring performance.
  3. Research resource/items requirements for implementation of e-commerce strategy.
  4. Arrange with your assessor to participate in two resourcing consultation role-plays.
  5. Participate in consultation role-plays with relevant personnel to determine resourcing needs. You will role-play with the:
    1. Sales and Marketing Manager – prepare to discuss human resourcing/ staffing requirements
    2. Technology consultant – prepare to discuss physical resourcing requirements related to development of e-commerce website. i.e IT related equipment.

Note: During consultation, ask questions and encourage the personnel to provide information.

  1. Develop an action plan for the implementation of the e-commerce strategy. In your plan include:
    1. physical resourcing (all major steps for resourcing, including procurement/purchasing of different types of resources, but not to the detail of including all procurement steps for each resource type)
    2. human resourcing (all major steps, e.g. recruiting, training, communication)
    3. timelines and milestones for implementing the e-commerce strategy
    4. consultation and communication (ensure all affected staff are informed and engagement is encouraged for all stakeholders).

An example action plan template is provided in Appendix 2.

Ensure plans adhere/meet to organisational requirements set out in the scenario/situation and in relevant policies and procedures.

  1. Develop performance indicators for operational and financial targets and amend or develop existing operational plans to include KPIs and financial targets related to e-commerce strategy. Develop a balanced scorecard for an e-commerce customer service representative including three KPIs and associated targets.

Note: The current budget and operational plan for BBQfun is located in Appendix 1. A balanced scorecard template is located in Appendix 3.

  1. Identify at least three risks to the implementation/setting up of the operational plan and develop a contingency/backup plan for each risk (you may use the contingency plan template provided in Appendix 4). Risks must include:
    1. one risk due to employee underperformance
    2. one risk related to management of intellectual property (IP)
    3. one risk due to breach/break- gap of health and safety compliance responsibilities.
  2. Develop a proposal for resourcing/items – equipment, staff etc to be presented for approval to the Operations General Manager. Include in your proposal:
    1. description of proposed implementation of resourcing
    2. breakdown of costs
    3. benefits to organisation
    4. a list of different approaches to developing key performance indicators
    5. risks to organisation by not implementing
    6. outline of identified risks and contingency/backup planning
    7. description of sources of information used to develop proposal (use internet research on technical aspects/features of e-commerce and importance to retailers; use consultation, use company financial projections).
  3. In a third role-play, present proposal for approval by the Operations General Manager.
  4. Submit a portfolio/selection of your implementation/setup 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:
    • consult with the Sales and Marketing Manager
    • consult with the technology consultant
    • present the resourcing proposal for approval from the Operations General Manager
  • submit a planning portfolio, including:
    • a summary of the operational environment of BBQfun
    • action plan
    • performance indicators for operational and financial targets (in the new/amended operational plan)
    • balanced scorecard for e-commerce customer service representative
    • proposal for resourcing.

Your assessor will be looking for:

  • reading and writing skills to use workplace information to write an operational plan that meets organisational requirements
  • oral/spoken communication skills to present information in a clear and professional manner, listen and comprehend/understand information and confirm understanding through questioning and active listening
  • planning and organisational skills to take responsibility for developing and implementing a plan to achieve operational goals including resource needs, strategy development, sequencing activities, identification of risks and impact on operational performance and generating contingency/backup plans
  • interaction/contact skills to communicate and empathise/understanding with stakeholders/interested parties during consultation processes and collaborate/work together to achieve business outcomes
  • numeracy (mathematical) skills to work with an existing budget/financial plan to allocate/share and manage financial resources
  • knowledge of models and methods for operational plans
  • knowledge of the relationship between an operational plan and organisational objectives
  • knowledge of budgeting/costing processes
  • knowledge of legislation and regulations (government and industry rules) relevant/connected to the operational plan of the organisation
  • knowledge of intellectual property (IP) rights and responsibilities relevant to the operational plan
  • knowledge of using KPIs to develop business objectives.

Appendix 1: Scenario – e-Commerce strategy

Background to scenario

The BBQfun Board of Directors and the 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.

You have been hired as an external consultant to manage operational planning activities for BBQfun’s e-commerce strategy.

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/include this functionality in line with relevant technical specifications. Existing infrastructure/setup such as office and store configurations/settings, would need to be adapted/changed to suit to the new strategy. Additionally, assets/properties-company possessions, 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/in line with relevant internal and external standards – legislation and codes of practice; intellectual property (IP) rights and responsibilities; and organisational policies and procedures.

Preliminary/initial–starting approval has been given to amend/adjust existing budget and operational planning to incorporate/include this strategy.

It is now 30 June 2013 and e-commerce operations are expected to be underway/in the process in one year and three months, by 1 October 2014.

Scenario task

As the external consultant, you will need to determine physical and human resourcing requirements. Review organisational documentation and undertake preliminary/initial research on e-commerce. Consult with the following 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, four of the required customer service staff could be sourced 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

$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 $3,000 = $27,000

Warehouse and office reconfiguration

$50,000

Total

$861,000

In addition, ongoing staff costs will be incurred/spent

The expected life of the initial investment is expected to be three years. (i.e how long for will the starting money be spent for)

Costs: e-Commerce strategy (ongoing)

Resources

Costs

Additional staff:

(At $40,000 year average annual salary)

· 4 online staff

4 x $40,000 ($160,000) per year for 3 years = $480,000

· 4 warehouse staff

4 x $40,000 ($160,000) per year for 3 years = $480,000

· 6 delivery drivers

6 x $40,000 = $240,000 per year for 3 years = $720,000

Total

$1,680,000

The following expenses should be incurred in the 2014 financial year and be included in associated financial targets for spending: (these costs will also happen in 2014)

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. (i.e that the company will have start making some money (profits) in 3 years time)

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

 

FY 2014

FY 2015

FY 2016

Cash flow from operations (minus ongoing operational costs associated with e-commerce 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 2014 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 leading to a breach/break of consumer law
  • high risk of staff misunderstanding changes and considering online sales as threat to jobs (i.e staff think that by having a website, they may be replaced and may lose their jobs)
  • medium risk of not being able to recruit fully trained online staff
  • low risk of loss of IP relating to confidential information contained within the e-commerce strategy when employees leave the organisation
  • medium risk of loss of IP ownership if a relationship with the website developer contract ceases (i.e – if work stops with the website developer then there is no real worry of any company IP loss)
  • low level risk of not complying with WHS legislation through lack of risk assessment conducted on potential musculoskeletal disorders resulting from poor customer service workstation design (i.e company is not too worried about the WHS issues as it is limited to furniture and workplace design)
  • medium risk of wastage due to overstocking product in anticipation of increased online sales.(risk levels are not too high if there is loss/wastage of product)

All additional costs associated with contingency planning will be approved in accordance with BBQfun policies and procedures. (i.e any backup plans will be in line with company policies rules and regulations)

Budget summary

BBQfun 2013–2014 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

$5,004,714

 

Net profit

$1,672,286

Net income before tax.

Operations

General operating hours

BBQfun operates Monday to Friday from 9 am to 5 pm. BBQfun will be operational year‑round except legislated (government stated) holidays.

Human resources

Pat Mifsud, CEO

Pat is responsible for working with the Board of Directors to oversee/supervise 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 (3 monthly) and at the end of projects, Riz is responsible for viewing budget variation/changes reports and incorporating/including 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/supporting 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 (enterprise resource planning) and CRM (customer relationship management) 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 (enterprise resource planning) and CRM (customer relationship management) 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/extra level office space (used to be occupied by online retailer, currently subdivided and occupied by the 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/keep going and ensure the business meets all opening and ongoing financial obligations/commitments, bills etc.

The company may experience financial pressures during slow sales periods, (i.e will have cash problems when business is slow)

A long-term strategy to maintain a positive cash flow (enough money/cash) during these periods will be to diversify/extra business 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

$920,000

Premises expenses

$1,000,000

Insurance

$120,000

Depreciation and amortisation

$177,569

Office supplies

$65,068

Training

$62,187

Total Expenses

$5,004,714

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/deals 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 2013–2014

BBQfun Operational Plan (with strategic objectives, measures and tasks) FY 2013–2014

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 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).

● Lost Time Injury Frequency Rate (Target=2)

● 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 = $5,004,714

● 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 2: 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)

Plant and equipment

30/6/2016

Sam Lee

$50,000 x6 = $300,000

Forklifts:

$10,000 x3 = $30,000

Promotional costs

1/7/2016

Riz Mehra

$300,000

Recruitment

30/6/2016

Les Goodale

$30,000

Working file

Communication

30/6/2016

Les Goodale

Employee data

Online customer service training

$3,000 per

Tracining staff

30/6/2016

Les Goodale

Staff member = $24,000

       
       
       

Appendix 3: Balanced scorecard template

KRA (key result area)

Target

KPI (key performance indicator)

Result

Professional

development

 Four hours of professional development including coaching for each team

Hours of professional development and training on customer service

 

Financial

5% reduction in operating expenses for Brisbane store.

Reduce travel expenditure to $2700

$expenses

$value of travel receipts

 

Customer

satisfaction

Less than 3 complaints per quarter.

Less than 3%

Number of complaints by number of calls

% of rejected deliveries

 

Internal business processes

25% increase in third quarter.

Performance management processes should be carried out for all employees three times per year

Number of products distributed by team

% of performance management processes carried out

 
       
       

Appendix 4: Contingency plan template

Contingency Plan

Company name: BBQfun

Name of person developing the plan: Pat Sweeney, Store Manager (Kenmore)

Who was consulted as part of this plan?

Name Position

Pat Sweeney Store Manager (Kenmore)

Kim Chen Operations General Manager

Les Goodale Human Resources(HR) Manager

Risk identified: Possible strike in January 2016

Strategies/activities to minimise the risk

By when

By whom

Review WHS procedures, incident reports and training practices.

1/12/2016

PS,KC

Review consultative practice including performance management process.

1/12/2016

PS,KC

Review pay scale and ensure pay scale is competitive:

  • determine an attactiver package for employees to consider
  • consult with senior managers to consider raising pay rates or initiating an incentives scheme

1/12/2016

LG

Hold meetings, interviews, with all affected employees to:

  • inform employees of operational strategies and objectives
  • invite feedback and outline ways to provide feedback
  • inform employees of review
  • discuss remuneration and incentives agrees by senior management, training, consultation processes and other topics of concern

15/12/2016

PS,KC

Develop contingency plan should strike proceed:

  • develop a PR strategy
  • investigate legal options
  • develop catsh-up production plans
  • develop negotiation strategy:

è investigate alternative human rescourcing

è investigate possible union tactics and develop responses

  • develop alternative budget for:

è legal, PR consultation expenses

è decreased revenue

è increased future production costs involving overtime, etc.

 

15/12/2016

Senior management CFO

Board

CEO

Amend performance management process as per review and feedback:

· ensure training as required

· ensure alignment with operational/ strategic objectives

· produce or amend policies and procedures as required

20/12/2016

PS.KC

Follow up with employees:

· meet to discuss issues, developments and feedback

· invite further feedbak

30/1/2016

PS

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