Process Driven Profitability

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The PDP model in Lawson Opportunity Analyzer

Lawson business solutions are designed to help increase your company’s profitability. One way of helping you achieve this is a unique enterprise performance management tool – Lawson M3 Opportunity Analyzer.

The core idea behind Opportunity Analyzer™ is the concept of process driven profitability (PDP), a mix of the company’s profits and losses, balance sheets, and working capital statements. The model used is a specialized variant of the wellknown DuPont Model.

When using Opportunity Analyzer you define the current values, and the PDP model compares the potential profitability of improvements to your business processes. By connecting each opportunity to a profitability area, the best areas for increased profitability are easily uncovered such as:

• Sales volume: Simulates an increase in net sales revenue and also results in increased COGS, SG&A costs, and working capital.
• Price: Simulates an increase in net sales revenue through a price increase (for example, reduced margin erosion such as discounts, and penalties paid due to late deliveries).
• Cost (COGS): Simulates reduction in COGS, either as salary costs or other operating costs (for example, direct material costs), with a direct impact on operating profit.
• Cost (SG&A): Simulates reduction in SG&A costs, either as salary costs or other operating costs, with a direct impact on operating profit.
• Working capital: Simulates reduction in inventory, accounts receivable or fixed operating assets or an increase in accounts payable.

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Profitability Components
Profitability components contain the Opportunity Analyzer “recipe for success”. A number of predefined, generic profitability components are connected to the PDP model. For each profitability component a number of key performance indicators (KPI) have been defined. Most of these have been standardized by well-known industry bodies such as the Supply Chain Council (SCC). Depending on which business process group is being analyzed for improvement, relevant industry best practices are also connected to the profitability component.