Supply chain management helps in each phase of a product’s life cycle, from the launch of the product, to its initial growth phase, to maturity, and then when the product’s life cycle has ended. But, not all management strategies are equal. Even when you’re implementing one in your company, there are likely ways to improve its efficiency and efficacy.
How Supply Chain Affects Life Cycle
The lifecycle of a product can be broken down into several stages. First, there’s the launch phase. This is sometimes considered the most exciting part of the process. Everything is new and fresh. The launch phase is where a product is introduced. Usually, demand is low and the company has a lower need for capacity in the manufacturing department. It also doesn’t need to worry too much about warehousing.
This will change over time as the lifecycle evolves into the growth phase. The growth phase is when consumers are starting to get used to the idea of the product, and are creating demand for it. Usually, demand is initiated by marketing, but often, consumers drive growth beyond the initial PR campaign.
This is also when feedback is initiated by the consumer or the company so that the product can be refined and improved.
The maturity phase is when sales start to flatten out and demand stabilizes. Feedback is ongoing, but the product has pretty much hit its stride, and few improvements are made on the core of the product. Sometimes, the product’s life can span years, or decades, with minor improvements being made to improve functionality. However, for the most part, the product remains essentially the same in terms of usability.
Eventually, a product’s usefulness and marketability decline. Sometimes, this happens over years, but more often than not, it happens over a period of months (especially in the tech sector). The old product is revamped into a new product line with a new name, new core features, and the cycle begins again.
The product may not meet consumer needs, or it’s been replaced with simpler products that are less expensive.
The supply chain’s response to the lifecycle determines how much money can be made from it, how the company responds to business challenges in general, and how profitable the company will be over the long-term.
For example, in the early stages of growth, delivering the product to meet demand is the most important, even when that demand is small. The supply chain must be highly responsive or the product might fail to stick in the marketplace.
Over time, and as the product matures, the emphases must shift. The supply chain must focus away from fulfilling sales to improving efficiency in the chain to help reduce cost. This is the part of the process where sales no longer drive growth or, when they do drive growth, they add minimally to the process.
Efficiencies in buying, financing, and manufacturing become critical for the long-term success of the product. Limiting distribution becomes more important, even though the product must be made available to the consumer. Efficiency takes priority.
Improvements That Can Be Made
Innovation comes from several strategies, or combination of strategies. First, designing for manufacture – the product must be simplified in terms of how it’s manufactured. Making it easier to reproduce lowers costs, systematizes processes. The result is a lower cost to the consumer and wider profit margins.
The product must be designed so that it minimizes the number of components in the final product, thereby reducing costs and improving profits. Often times, this also results in the company building subsystems so that the whole product is easier to put together.
The product also needs to change in how it’s assembled. Products need to be easy to repair, and they need to be improved in design to minimize failures or weak points, improve consistency, and ultimate to reduce costs of servicing. This is called “standardization.”
And, while many companies choose to retain supply chain management in-house, this is often a service that’s best outsourced. For example, services like the Beltmann 3PL reduce overall supply chain costs by specialization – the company is singularly focused on the task of supply chain management.
This is a superior approach compared to trying to make a company wear multiple hats.
Types of Innovators
The three types of innovators that tend to perform best are fast-paced, high quality innovators, and efficiency innovators.
Fast innovators can get products to market quickly, make refinements more quickly, and they react immediately to competitor actions, increase profits by turning ideas into marketable products.
High quality innovators focus on product refinement, are more cautious, and are focused on quality, reducing errors, and eliminating quality issues in products.
Efficient innovators are focused on development and fulfillment projects. Their goal is to reduce supply chain costs through increased “to market” efficiencies.