Labor Expense as a Percentage of COGS
This PDF report includes benchmarking data (in a visual, chart-based format), an comprehensive KPI definition, characteristics of high performers and technical details on measuring Labor Expense as a Percentage of COGS. Purchase and download this easy-to-understand, presentation-ready report immediately to compare performance levels, set attainable performance targets, and push towards best-in-class performance for this KPI.
What is Labor Expense as a Percentage of COGS?
The labor-related expense (wages, salaries, benefits, training etc.) incurred divided by the total cost of goods sold (COGS) incurred by the company over the same period of time, as a percentage.
Why should Labor Expense as a Percentage of COGS be measured?
Labor Expense as a Percentage of COGS measures the labor cost incurred by the plant (wages, salaries, benefits, training, etc.) in relation to the cost of goods sold (COGS) incurred by the plant, or production facility, over the same period of time. Excessive labor costs can be a sign of slow cycle times, high rework rates, overstaffing of the production plant and sub-par production employee training and performance. While companies typically seek to streamline plant operations and reduce employee positions to decrease labor costs, great care should be taken when doing so as too many layoffs can have a negative impact on company morale.
Download a Sample Labor Expense as a Percentage of COGS
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