As a result of these changes the product strategy will also require changes in the supply chain management. The supply chain as a chain of interrelated functions and organizations with a role of moving raw materials, products, inventory, packaging and everything until the final products are delivered to the end users, require strategic planning and working with the supply chain partners.
An organization managing the supply chain successfully has to work with its partners such as vendors, suppliers and distributors to make sure it implements the strategic plan. However as the strategy changes throughout the product life cycle so the supply chain has to change in order to implement the strategy.
In every product management the product life cycle involves the 4 major stages in the product evolution from the very beginning until the end:
- market introduction,
- market growth,
- market maturity and
- market decline.
During the first stage, the market introduction, the supply chain activities are carefully crafted, integrated and coordinated with the purpose of introducing the new product to the market. Since this is a new process for the company as well as the partners it is critical to select the players in the supply chain carefully.
In addition to market introduction this is the stage when the foundation is built for an effective supply chain management. All the supply chain activities must be integrated and driven by the requirements of entering the market.
The second stage is the market growth. Successful products, after they are introduced to the market and are accepted by the end users, have potential for growth. The product has already proven to be successful and there is a demand in the market so the company needs to figure out and define the growth plan. How the growth stage will change the supply chain requirements?
Comparing with the market introduction the market growth requires more aggressive and responsive supply chain capabilities. The supply chain process has to be well organized and smooth in order to keep up with any changes in the demand. The volume at this stage can change dramatically so it is important to plan and develop a smooth and responsive supply chain.
Next, if the product survives the market growth stage it will evolve into a maturity stage. This means that there are not much opportunities for growth anymore and the company focuses on maintaining and defending its market share and volume by providing a proven product to a stable and predictable customer base.
This changes the focus of the supply chain management from growth oriented into a stable process where cost management and quality control management is important so the company can maintain the product market share and provide competitive prices since there are many competitors at this stage.
Finally, as maturity stage of the product lifecycle ends the market demand starts to decline. What does this mean for the company? Since the market size declines there will be no more space for all the competitors and some of them will exit the market and those companies which stay will have to provide a cost effective and high quality products and services.
The supply chain requirements are very strict and focused on cost reduction and quality control. The company works with its partners to get rid of all the non-critical activities and cut costs in every step of the process. During this stage outsourcing the activities which are not critical should be considered as well.
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