Strategies for supply management as a product moves through the product lifecycle.
Introduction:
1.Supply Chain Management
Supply chain is an integrated process incorporate of entities, that form a network of
interdependencies, such as suppliers, manufactures, distributors and retailers. A form of
organizing participating entities that all operate together in a mutual cooperation basis, which
control and improve component and information flows. Include acquire raw materials and
flow of information in order to convert them to specified final products and are carried out to
meet customer needs (Beamon,1998), (Christopher M, 2013., Skjott-Larsen T, 2007). The
ultimate goal of supply chain management is to fulfil customer's demand with more
efficiency. In the manufacturing aspect it is to create the right product, for the right customer,
within the right quantity, at the right time.
However, there is no specific general guideline to organise particular supply chain. Strategies
are varying such as pull and push strategies. The manner to manage the supply also depends
on the cooperation between suppliers and customers, which in a result determine the rate of
response in changing customer needs, as well as strategies that enable efficient operations
and cost control. There are many factors which determine organising the upstream supply,
one factor that has great impact on the supply chain and its operation as described by( Fisher
M.L., 1997) is the structure of the offered product. He divided the products into functional
and innovative, this concept also proposed and developed by Kaipia and Holmstrom (Kaipia,
R., Holmstrom, J., 2007).
2.Product Types and Lifecycle
Product lifecycle is another significant factor that covered by number of studies on supply
chains particularly to focus on the product management in relation to product implementation
in the market (Mruk, 1994., Lambert, 2008). The entire product lifecycle with its stages are
widely described in the literature on marketing. According to (Kotler, P., L , Keller, K.L,
2012) product lifecycle defined as the formation of the product concerning the relationship
between sales volume and profits in the entire span of the product's life, from the moment of
appearance in the market until its withdrawal from the market. The future success or failure
of the product within the market is a matter of proper understanding of the PLC by
companies, which consequently help managers take decisions relating to the appropriate
period to implement and withdrawal the product in the market.
According to Hofer (1975, p. 798). One of the most fundamental factors to determine the best
and appropriate business strategy is to clearly understand the stages of the product lifecycle.
Furthermore, it has been identified by Biggadike (1981), that the product lifecycle consider as
one of the five main marketing contributions which led to strategic management.
Additionally Michael porter (1980, p. 157), observes the product lifecycle as "the grandfather
of concepts for predicting the probable course of industry evolution.
Broadly, there are three types that products can be categorised, functional, innovative and
hybrid (Huang et al., 2002). Functional type of products classified its demand to be
forecasted quite accurately and their market share remains fairly constant. This type enjoy
long lifecycle with surface design modification that lead to different product types. They
categorised with lower product variety and relatively long lead times.
Innovative products on the other side are new products capture a wider share of the market as
a result of organisational development. this type is undoabtly differ from other available
product types and more adapted to the customer requirements i.e. mass customisation.
Innovative products have unpredictable demand. They made as a result of customers
specification in the design area which include their any changing requirements. This type
categories with shorter lifecycle and high product variety and shorter lead times. Hybrid
products are a mixture of both functional and innovative components. As Fisher’s stated in
his product framework, functional products require physically efficient supply chain. On the
other hand, innovative type of products require marketing responsiveness supply chain.
Generally, all products have a lifecycle that represent a product category within a curve of
unit sales over time (Wiersema, 1982), the division of stages proposed by Kotler is the most
widely applied which classified into four discrete stages excluding the research &
development stage since it does not consist of physical product flows. The stages are :
introduction, growth, maturity and decline.
All organisations should be fully understood of the product lifecycle, because all markets and
products strategic considerations are influenced by product life cycling. Understanding the
shape of cycling result to right product life cycle strategy. Each stage shows the changing of
customers demand and the variety of sales in each phase.
The first step where product is introduced, sales will be low, the volume begins to grow
significantly when customers become aware of the product and it benefits. During this phase,
the organisation is likely to obtain additional costs related to the initial distribution of the
products. The period observed from the moment of sales growth until a drop in sales is
covered by the growth stage (Levitt, 1965). Competition increase in this phase with rapid
growth of sales. the growth stage is frequently followed by a decline of sales and the
beginning of product maturity stage, this is the longest phase and most profitable. sales
volume continue to increase but in slower rate. the aim of the maturity stage is to maintain
market share and extend the product lifecycle. at the end of this stage, a fall in the monthly
sales will occur as the market becomes saturated and the product becomes technologically
obsolete. which called the decline stage where the product is rejected firstly by customers
then the company offers its withdrawal from the market.
Figure 1 Stages of Product Life Cycle
3. Supply strategies
Typically, there are two fundamental strategies classified the supply chain, lean supply chain
which is practically equivalent to Fisher's physically efficient, and Agile supply chain
equivalent with his market responsiveness. Lean represents continues improvement and
developing a value stream that focus on eliminating of waste (Naylor, Naim & Berry, 1999).
According to Brunn and Mefford, 1999, manufacturing companies since the early 1990s have
implemented a lean production strategy in order to increase their competitiveness. Lean
strategy is supported by reduction of the cycle times, work in progress and finished goods
inventories, consequently to achieve cost reduction, enhance efficiency, internal
responsiveness and flexibility.
An agile supply strategy in contrast to lean is aim to provide customer driven products with
unique features that basically focus on responding to unpredictable market changes, in order
to maintain a competitive advantage in the rapidly changing environment. It seeks to achieve
flexibility in quick delivery and lead time. supplier attributes within the agile strategy
involve speed, flexibility and quality. in the aspect of product design strategy, it is designed
to meet customer needs.
shortened product lifecycles and rapidly changing customer's requirements led to increase the
pressure on the entire supply chain in order to quickly deliver products and services in a more
responsive aspect. To compare the two different strategies and their impact on the length of
product life cycle, standard products position within lean supply chain consider relatively
long lifecycle times approximately more than two years. while innovative products in agile
strategy have short lifecycle (3months - 1 year).
4. The Impact of Product Lifecycle on Supply and Operation
5. Product-based supply management team compared with
traditional approaches to procurement
6. Supply and Operation strategies integration
References
Skjott-Larsen T., Schary P.B., Mikkola J.H., Kotzab H., “Managing the Global Supply
Chain.”, Copenhagen Business School Press, Liber, Sweden, 2007.
Christopher M., “Logistics and Supply Chain Management.” Financial Times / Prentice Hall,
UK, 2013.
Beamon, B.M., 1998. Supply chain design and analysis: Models and methods. International
Journal of Production Economics 55, 281–294.
[12] Kaipia, R., Holmström, J., “Selecting the right planning approach for a product”, Supply
Chain Management: An International Journal, Vol. 12, Iss. 3, 2007, pp. 3-13
[5] Fisher M.L., “What is the Right Supply Chain for Your Product?” Harvard Business
Review, Vol. 75, No.2, 1997, pp. 105-116.
[19] Lambert D.M. (edit.), “Supply Chain Management: Processes, Partnerships,
Performance.” SCMI, USA 2008.
[24] Mruk H., Rutkowski I.P., „Analiza, planowanie, wdrażanie, kontrola. Strategia
produktu.” Polskie Wydawnictwo Ekonomiczne PWE, Warszawa 1994.
[15] Kotler, P., Keller, K.L. “Principles of Marketing”, Pearson Education, New Jersey,
2012.
Hofer, Charles W. and Dan Schendel (1978), Strategy Formulation: Analytical Concepts , St.
Paul, MN. : West Publishing Co.
Biggadike, E. Ralph (1981), "The Contributions of Marketing to Strategic Management",
Academy of Management Review, Vol. 6, #4 pp.621-632.
Porter, Michael E. (1980), Competitive Strategy: Techniques for Analyzing Industries and
Competitors , New York: The Free Press.
Huang, S.H., Uppal, M., Shi, J., (2002). A product driven approach to manufacturing supply
chain delection. Supply Chain Management: An International Journal 7 (3/4): 189–199
Levitt, T., “Exploit the product life cycle”, Harvard Business Review, vol 43, November–
December 1965, pp. 81–94
Wiersema, F.D., (1982). Strategic marketing and the product life cycle. Marketing Science
Institute, Cambridge, MA, April.
Naylor, J. B., Naim, M. M., & Berry, D. (1999). Leagility: Integrating the lean and agile
manufacturing paradigms in the total supply chain. International Journal of Production
Economics, 62(1–2), 107–118.
Bruun, P., & Mefford, R. N. (2004). Lean production and the internet. International Journal
of Production Economics, 89(3), 247–260.