Personnel savings in six sigma projects
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- This topic has 7 replies, 7 voices, and was last updated 16 years, 9 months ago by
Bob J.
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- April 29, 2004 at 10:06 am #35389
We have improved a process and reduced headcount by two persons. Do we count the savings (their salaries) in the first year only or for 3 years (the normal span for counting the savings)?
0April 29, 2004 at 10:32 am #99389
indreshParticipant@indreshInclude @indresh in your post and this person will
be notified via email.logically speaking take into account a few things
– will the personnel involved in all non value added stuff which you improved and tehreby shall never be required again
– if for example you reduce number of calls coming at a given point which are dependent on total subscribers you may reduce the headcount for few months but these people shall be required as the number of subscribers increase, typical case of linking projects savings which are short term
– if there is an automation done which reduced the personnel completely and which takes care of long term as well you may take the savings of their salaries
else can put the savings at the end of the year seeing that these personnels were not required at all and the process worked smoothly
hope it suffice
0April 29, 2004 at 12:32 pm #99402Indresh
But you did not reply to the real question: how long the period is for counting the savings? just the first year or next 3-4 years? What is the norm in these matters? Is there an industry standard or different companies would have different policies?
Presume that process output remains the same in foreseeable future.
0April 29, 2004 at 6:20 pm #99445
Malcolm UptonParticipant@Malcolm-UptonInclude @Malcolm-Upton in your post and this person will
be notified via email.I would think this is a question that should be answered by your finance people. They are in a better position of knowing what the rules being used to count savings for Six Sigma projects and what the accounting rules your company is using. All we could do is make guesses based on what our finance people have decided. Those guesses will only be helpful if we happen to have made all the same choices on the accounting rules, not a highly likely event.
0May 20, 2004 at 6:12 am #100511
NorbertParticipant@NorbertInclude @Norbert in your post and this person will
be notified via email.If the savings are certain, then you do not have to wait to validate the improvement and you can immediately close your project.
I guess the way you report savings must be established within your organization. We always report project results on a per year basis.
0May 20, 2004 at 1:50 pm #100530On eyear or three years, depends on how your company wants to make the determination. My comapny uses one year savings in all aspects.
0May 22, 2004 at 12:34 pm #100641I think it is generally considered on one year basis.
0May 23, 2004 at 3:03 pm #100658Naveed,
My experience is that it is typically baselined against the previous years performance…
Bob J0 - AuthorPosts
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