Managing the Supply Chain With Reference to Product Lifecycle Stages

Operations The Impact of the Product Lifecycle on Supply Chain Management The management of the supply chain is an important element of operations. The supply chain configuration, including issues such as make or buy decisions, as well as type of supply chain deliveries, needs to match the products that are being supplied and may be heavily influenced by the lifecycle stage, and the type of demand and production that emerges during the different stages (Aitken et al., 2003).

To consider this it is necessary first to look at the product lifecycle and then at how it may impact on the supply chain management, The lifecycle is traditionally presented as having five stages; development, introduction, growth, maturity, and decline (Kotler and Armstrong, 2013).

The development stage is the stage prior to the product being released on the market, the introduction is the time when the product reaches the market and sales start, but are slow, growth sees the pace of sales increase, and may be sub-divided into early growth and later growth, Maturity is seen when the market has reached it full potential and the peak of sales level, after this the sales levels will reduce and the market is said to be in decline.

For many product manufacturers will seek to renew the product lifecycle during or just before maturity to prevent the decline being reached. It is also important to note that the length of the product lifecycle can vary greatly; for some in fashion item it may be a few months, for other items it may be years or even decades (Kotler and Armstrong, 2013).

The problem with supply chain management is that all of the idea goals associated with cost, quality, service and lead time cannot all be satisfied with the same strategies, there will always be some need for some concessions, to optimize the elements of the supply chain characteristics that are most important for operations (Aitken et al., 2003). The first consideration may be to look at the type of product that is being produced.

This is important as the same product may be perceived differently during the various stages of its lifecycle production (Aitken et al., 2003). Fisher (1997) broke products and the supporting manufacturing and supply chain operations into two categories; products were either innovative or functional, manufacturing processes, and therefore the support supply chain activities may then be focusing on efficiently, or responsiveness, as the process cannot be fully optimized for both.

Fisher argued innovative products would require a responsive process, whereas functional products which are associated with the mass markets would require a focus on efficiency, if the converse were true there would be a mismatch (Fisher, 1997). This indicates that products at the beginning of a lifecycle are often innovative, they are new, and may need to be adapted or changed, and as such the processes and including the supporting supply chain need to be flexible (Fisher, 1997).

As the product moves towards a greater level of sales and mass production is needed, then the focus of efficiency will allow for the economies of scope and sale to be realized (Fisher, 1997). The question is how should this be achieved? During the development period, from the concept through to the development for market, the most appropriate process may be the design and build. This can usually be undertaken in-house, but is some industries there is often collaboration at this stage, for example the automotive industry (Aitken et al., 2003).

It is the need to develop and design, making changes and assessing that is the key factor at this stage, and issues such as commercial confidently may also be considered. During the introduction stage there will be a relativity small amount of sales, and there may still be the need of changes.

At this point, it is possible the design and build internal processes may be most appropriate, but if mass manufacturing is required, the small levels of inputs are needed, where there are high capital costs required to set up in house production, this may see the beginning of outsourcing, but with orders placed on a pull basis. As the growth takes place the firm will move toward the increased need for efficiency and the potential to gain from economies of scale.

There may be benefits to taking the production of the parts in-house, with benefits associated with the cost of setting up in-house supply, especially where there is a desire to control the overall process (Aitken et al., 2003). However, whether in-house or outsourcing, it is likely this will see the firm move towards material requirements planning (MRP) potentially with the use of a push-based system, using forecasting and scheduling.