The Product Life Cycle: Understanding Its Impact on the Supply Chain.

Product Life Cycle in the Supply Chain | Imperia
Imperia Article
Published: 26/4/2023

Efficient supply chain management is crucial in the competitive and globalized environment we are immersed in. The ability to plan and manage demand effectively is vital for minimizing costs and maximizing the profitability of an organization. In this context, the product lifecycle plays a crucial role. From conception to market withdrawal, a product goes through different stages that directly impact the supply chain and demand planning. Properly managing the product lifecycle is essential to reduce risks and leverage the opportunities that each stage offers.

In this article, we will delve into the concept of the product lifecycle and its impact on the supply chain. Additionally, we will introduce some new practices in this sector.

Impact of Product Lifecycle on Supply Chain Management and Demand Planning

From the introduction stage to market withdrawal, a product goes through various stages that present different challenges and opportunities for the supply chain. Significant changes in demand occur during these stages that need to be monitored and managed to optimize the supply chain.

  • Introduction: In this stage, there is significant uncertainty regarding the expected demand, as historical data is lacking. Additionally, the demand for the product is initially low. The success of this stage will depend largely on the company's ability to anticipate the product's demand, create awareness, and establish a solid customer base.
  • Growth: The demand for the product starts to increase as it gains traction in the market. This stage is critical because production capacity must be sufficient to meet the constantly rising demand. Demand planning is crucial at this stage, as miscalculations can lead to significant losses.
  • Maturity In the maturity stage, demand growth stabilizes and starts to decline. During this stage, the company must find a balance between supply and demand to avoid excess inventory and supply shortages. Optimizing inventory management processes and production planning is fundamental at this stage to reduce costs and maintain profitability.
  • Decline: The demand for the product begins to decrease as it approaches the end of its lifecycle. At this stage, the company needs to adjust its supply chain and demand planning to reduce storage costs and avoid excess inventory. The company may choose to gradually phase out the product from the market or attempt to revitalize it through new marketing strategies.
  • It is important to note that demand management not only involves demand forecasting but also collaboration between departments. Marketing, sales, and finance must establish appropriate pricing and promotion strategies for each stage of the product lifecycle. By aligning demand management with the different stages, companies can optimize their supply chain and improve long-term profitability.

    For this reason, there is a growing trend in the use of tools and supply chain management software due to their significance in the lifecycle of products or services. These tools facilitate and enhance optimal outcomes in each vital phase of a product or service.

    How supply chain strategies should adapt according to the product lifecycle stage.

    Infographic by Imperia: Product Life Cycle

    The role that a supply chain software plays in product life cycle management.

    An effective SCM software can help companies make informed and fast decisions at each stage of the product life cycle. They provide real-time visibility of supply chain data and facilitate collaboration and coordination among different stakeholders, leading to increased efficiency and cost reduction for the company. In summary, SCM software has become an essential tool for product life cycle management, ensuring improved efficiency and profitability for the company.