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PLM: Product Lifecycle Management
Şubat 20th, 2017-Lean Six Sigmaadmin 0 Comments

According to a study, fifty percent of the turnover of telecommunication industry achieved in the last year comes from the products developed in last three years. The shortening lifetime of the product requires that this concept must be followed in a much more careful way. Academic researches show that the product characteristics are not constant in different phases of product lifecycle; they show variability and a different production strategy should be followed for each phase. Indeed, demand characteristic of product changes during the lifetime and this change effects directly to the change of both production and supply strategies (planning, purchasing, production, shipping).

Product lifecycle generally consists of four phases and the products exhibit different demand characteristics in each phase. While speed, quality, delivery in time is at the forefront in first launch to the market, price factor appears as a more dominant character in growth and maturity phases due to cost pressure.

1. Introduction: It is the stage of submitting new product to the market. In this stage, demand is not explicit yet for product that is launched first and the product availability is the top priority (Order Winner: Availability). Therefore, the products are produced with MRP based pushing system (MTS) in order to be available in the market in this stage.

This phase at the same time is the stage that all studies in operation have been completed with tests and simulations and the product is tested in real market conditions by the users.  It is extremely ordinary that some changes are still made on product with the data taken from the field. For that reason, taking the product that has new launch to the market usually is not quite recommended.

2. Growth: The new product has passed to the real test in the first phase and characteristics are identified clearly. As long as the product is accepted by the market, the priority replaces towards cost (Order winner: Cost) and the kanban system is used for management of this process. New product derivatives are started to produce in accordance with demands came from the market, variety partially increase. By the way, competitors did not stand idle and they have also started to present similar nature products. In this phase, it is benefitted from kanban and MTO strategies.

3. Maturity: the product comes to the maturity phase in this stage and products of other companies have also existed in the market. Product variety shows rise and the priority of the market in this phase is variety, speed and cost (Order winner: Customization, speed, cost). Cost factor have started to make feel the effect with speed in competition in this phase. Increasing product variety is not made suitable laying in stock of each product with MTS approach. For this reason, CTO and MTO strategies are generally used in this stage.

4. Decline: The product is at the end of its lifecycle now. In this stage, the single priority of the market is cost (Order winner: Cost) and in this context, Production is done with mass production method called MRP. Especially the last phase of product lifecycle should be followed carefully with regards to overproduction or underproduction. In this stage, the product start to be out of the scope and studies on launching the new product to the market is needed. Not catching the moment that time passing the product from maturity level to the decline point is directly effects to formation of dead stock and late launch of product to the market. In this context, the last phase of product has to be followed very carefully. The negative example of this situation is seen like staying the raw materials used in production of product that is out of the scope, becoming unsalable the finished product stocks.

Let this thread open up a bit if you want.

The start of the last phase of product lifecycle (Decline point) has to be followed carefully in order not to be overproduction or underproduction. At this stage, the product has gradually began to go out of scope (phase out). This production material procurement and manufacturing to be done in a more controlled way and market entry studies of new product that that replaces this product are required. When we analyze the material stocks of business, we find the stocks that have no longer usage possibility or taken too much, not moved for a quite long time (Excess and Obsolute Material: EO). The same situation applies to finished product inventories. One of the main reasons of pending stocks more than six months in your business is missing the decreasing point on product lifecycle. In other words, although the product have started to see less demand in the market, purchasing and production department could not notice the status, did not brake and continue the supply / manufacturing processes. As a result of this, there are unusable or nonsalable materials in stocks, the launch of new product to the market delays. In the opposite case, if viz it is the situation that early brake before the decreasing point, it affects the decrease of sales by shortening the production. The root reason of this situation is the lack of effective communications in business and not doing pursuit the product lifecycle process enough. During the transition to the last phase of product lifecycle supply and production should be done in a highly controlled way (Safe Driving).

In order to avoid this situation;

  • Product manager should strictly strake out to product as a product owner and follow its every phase fully.
  • R&D department should develop new product in the last phase of product and follow the launch time of the new product to the market.
  • Sales & Marketing department should locate the actual reduction point of product by analyzing real time sales trends.
  • Purchasing department should manage the supply operations in a controlled and deliberate manner when this situation gets close to.

Product lifecycle management process does not see enough interests by many companies. However, the effective management of this process is very important both competition and productivity. As described above, the products exhibit variable demand characteristics during their lifecycle and applying different strategies in different phases of product is required.  The top of the most important issues, designing supply chains dynamically, watching the market variabilities very well and applying proper strategies to this variability are vitally important in today’s conditions which compete not companies but supply chains.

Similarly, different supply (purchasing) strategies are also required in various phase of product lifecycle. With a clearer explanation, material supply may need to be made from different companies at different stages.

In general, “quality, delivery in time, cost, delivery time and flexibility” issues come into prominence as the prior criteria that should have in a supplier during the supplier selection. We make our decisions according to combination of these factors strategically. While speed, quality, delivery in time is at the forefront in first launch to the market, price factor appears as a more dominant character in growth and maturity phases due to cost pressure. In this context, the supplier which is preferred for the first phase may not be fully respond to the business goals in the next phase because of the change in factor weights. These results tell us that it is needed to have a dynamic structure on the supply/purchasing process similar to production strategies.

However, another issue that should be considered in this stage is what degree the change of supplier cost effects the system (Switching cost). Although nevertheless cost is an important factor, the other factors like quality, delivery etc. are also the top of the topics that should be considered in this phase.

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