Labor Cost Is Mitigated

Labor Cost

The revenue generated by value analysis through cost reduction strategies and lean six sigma practices often offsets the labor cost. In some cases citing the transportation industries as well as the financial institutions, between 5% and 20% cost savings can be achieved. The cost reduction amount realized can be used to mitigate the labor cost.Companies have the choice to use these cost reduction realized savings as back up support for payroll short falls when ever possible. As always, valuable employees can be motivated more by awarding bonuses based on their cost reduction savings performance. This can be a win win situation for both the employer and the employee. Furthermore, employer's need for valuable employee retention to work on additional cost saving projects is justified. Incremental revenue accrued through implementation of value analysis becomes more meaningful especially when the very same employees who are bringing in the extra cash are given fair amount of job security. Other benefits include increase in companies financial bottomline .



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