Profitability improvement through profit mapping

Faced with a dynamically changing market, Boston Scientific's Cardiac Rhythm Management is seeking ways to increase its profitability. The division is experiencing a phenomenon where pulse generators and leads' product life cycle transitions may be slower than ideal. In addition, Boston Scientific is exploring ways to systematically and accurately assess its products' return on investments. The approach to the project is a technique called Profit Mapping. By carefully assessing the true full costs of each transaction, we can determine the actual profitability of each account and product and use the visualized results to detect anomalies, test hypotheses, and formulate action plans. The profit mapping tool allows us to compare profitability within each dimension of the business-individual product, account, sales person, territory, contract group, therapy system, or any combination of multiple dimensions. When we group data by accounts, we discover accounts that generate much higher profit than accounts that have higher revenue. Profit Map also shows some products or therapies traditionally believed to be unprofitable are actually high profit earners. Furthermore, time analysis of account profit maps revealed accounts whose revenue has been on the decline but profit on the rise thanks to transition in product mix. The delivery of the framework and its methodology concludes my internship but is only the beginning of Boston Scientific's journey to increase profitability. The Finance Department can now combine Profit Mapping data with the Sales Operations Department's experience and instincts to identify best practices that contribute towards higher revenue dollar efficiency, re-align sales incentives with company's profitability, and re-evaluate the opportunity cost of maintaining a marginal or net-loss account/product. In the long run, Profit Mapping can be scaled up to analyze world-wide data from all divisions to provide a clearer path to profitability.

Department dc:contributor.department

Leaders for Global Operations Program at MIT

Grantor dc:publisher

Massachusetts Institute of Technology

Year dc:date.issued

2014

Author dc:creator

• Chang, Brian, S.M. Massachusetts Institute of Technology

Advisor dc:contributor.advisor

• George Kocur and Jonathan L. Byrnes.

• Sloan School of Management.
• Electrical Engineering and Computer Science.
• Leaders for Global Operations Program.

Statement dc:rights

• M.I.T. theses are protected by copyright. They may be viewed from this source for any purpose, but reproduction or distribution in any format is prohibited without written permission. See provided URL for inquiries about permission.

Licence dc:rights.uri

• http://dspace.mit.edu/handle/1721.1/7582

Language dc:language.iso

eng

Handle dc:identifier.uri

http://hdl.handle.net/1721.1/90768

OAI identifier oai:identifier

oai:dspace.mit.edu:1721.1/90768