Drive Profit (Profit Driver Tree)
Profit Driver Tree (PDT)
WHAT IS A PROFIT DRIVER TREE?
An RLG Profit Driver Tree is the result of an in-depth analysis of our client's operations and is a diagrammatic representation of a business unit's drivers of bottom-line profitability. For a particular business, it shows the levers management can use to improve both the revenue and cost sides of the business. It highlights historical performance levels and quantifies in dollars the future opportunities for that business. When implemented, it will record how much of the opportunities have been captured. It also identifies current and needed data systems to manage the businesses profit drivers.
HOW IS IT BUILT?
The RLG Profit Driver Tree is initially built in the assessment phase of a Continuous Business Improvement project. RLG implementors work with the business unit's operations, accounting, purchasing, engineering, and shipping staff to tailor the Profit Driver Tree to that business's current situation and strategy. From this opportunities and targets are identified and quantified.
HOW WILL IT BENEFIT THE BUSINESS?
- Will put dollar values on the business's operating targets
- Will help to prioritize focus and action on the "big hits"
- Will obligate managers to focus on the whole business, not just one segment
- Will highlight large cost and revenue areas that had little or no action planned
- Will identify "holes" in the reports and data that are needed to run the operation with a business focus
- Will improve the front-line manager's understanding and skills to manage the operation as a business
- Will promote actions and understanding of the business's success strategy
- Helps to identify the need for new supplier agreements
