LCM is a business approach that can be used by all types of companies (and other organizations) to improve their sustainable results. This method can be used by both large and small companies and is intended to enable more sustainable value chain management. LCM can be used to control, organize, analyze, and manage product-related information and activities to continuously improve it throughout the product life cycle.
Almost all products manufactured have a limited life and go through four phases of the product life cycle during that life. Introduction, growth, maturity and decline. Manufacturers face different challenges at each of these phases. Life cycle management is the implementation of various strategies to overcome these challenges and ensure that manufacturers can increase sales and profits for their products regardless of the cycle phases a product may go through.
LCM aims to make thinking and product life cycle sustainability work for companies that strive for continuous improvement. These are companies that try to reduce their footprint, minimize their environmental and socio-economic pressures, while maximizing their economic and social value. Life cycle management incorporates various operating concepts and tools.
Most consumers are unlikely to be familiar with the stages of the product life cycle. Even though they consciously choose to switch from one product to another, it is more out of personal taste or simply wanting the newest and greatest rather than judging what stage of the life cycle the product can go through.
Life Cycle Management Meaning
This management philosophy, which integrates a holistic approach to the life cycle of organizations in their value chain management, is known as Life Cycle Management (LCM). Value chains are related activities carried out by an organization in providing a product or service, with each related activity providing added value. LCM is a systematic progression in organizing, analyzing, and managing the impact of sustainability throughout the life cycle of a product, process or activity. LCM can be seen at the product or service level, or at the company level.
For example, a company may be interested in managing the life cycle of one of its products to improve sustainability, or see its portfolio of activities more comprehensively as part of a broader approach to sustainability. One of the main benefits of life cycle management is that it alerts management to potential “hotspots” or areas that may represent environmental or social problems.
How to Manage Product Life Cycle
This not only requires product life cycle management software, but requires more. In order to effectively manage the product life cycle, companies must focus very closely on a number of key business areas:
- Development: Before a product can begin its life cycle, it must be developed. Research and development of new products is one of the first, and perhaps most important, stages in the production process that companies and money must invest in ensuring product success.
- Funding: Manufacturers usually need significant funding to bring a new product to market and maintain it during the introduction phase. Further investment in the growth and maturity phase, however, can be financed through a profit from a sale. In a downturn, additional investment may be required to adjust the production process or to open up new markets. Throughout the product life cycle, companies must consider how best to finance their costs in order to maximize their profit potential.
- Marketing: Over the life of a product, companies need to adjust their marketing and promotional activities depending on which stage of the product cycle the product goes through. As markets develop and mature, consumer attitudes towards products will change. Therefore, the marketing and advertising measures that bring a new product to market in the introductory phase must be very different from the campaigns used to protect market share in the maturity phase.
- Production: The production costs of a product can change throughout its life cycle. First of all, new processes and devices mean high costs, especially with low sales. As the market grows and production increases, costs will gradually decrease. and if more efficient and cheaper methods of production are found, these costs can fall even further. Companies not only need to focus on marketing to generate more sales and profits, but they also need to find ways to reduce costs during the production process.
- Information: Whether it’s potential market data that makes a new product profitable, feedback for various marketing campaigns to determine which ones are most effective, or monitoring market growth and likelihood of deciding on the most appropriate response, information is critical to product success. The manufacturers who effectively manage their products along the product life cycle curve are usually the ones who have developed the most efficient information systems.
Most manufacturers accept that their products have a limited life. While there is not much they can do to change this by focusing on the key business areas mentioned, Product Lifecycle Management can ensure that the product is as successful as possible during this stage of its life cycle as long as it can.
Stages and Process of Lifecycle Management
The development of a product since its launch, its growth and popularity, and finally its decline and removal from the same market is called the product life cycle. These can be divided into 4 main levels:
- Introduction: After developing the product, the marketing team will develop an advertising and sales strategy and launch the product on the market. Sales can be low and the product may or may not have competitors that can or may not compete with it.
- Growth: Once product acceptance is established, sales increase. Products can be developed to stay up to date.
- Maturity: Sales are likely to peak and there may be many competitors offering similar or better solutions to ensure stronger competition. It can be difficult to keep track of things and stay relevant.
- Reject: Now sales are actively declining and the product can be considered stagnant and redundant. At this time the product can be discontinued.
There is no set time period for each level. It depends on the type of product, how often you want the product to be competitive, how loyal the product is, how aggressive the marketing and sales are, and how competitive the industry is. Given the uncertainty of cycles, it becomes very important for businesses to manage these cycles effectively.
Example of product life cycle
The traditional life cycle curve is divided into four main phases as seen above. The product first goes through the introductory stage before entering the growth stage. Maturity follows until the product finally enters a decline phase. These examples illustrate these phases in more detail for specific markets. Examples are:
- 3D Television: 3D may have been around for decades, but only after significant investment by TV operators and 3D home TV technology companies became available, which is a great example of a product that is still in its introduction stage.
- Tablets: There are more and more tablets to choose from as consumers move through the growth phases of the cycle and more competitors enter a market that has truly moved since Apple launched the iPad.
- Laptops: Laptops have been around for a number of years, but the more modern components and features that appeal to different market segments will help sustain this product as it matures.
While their manufacturers and retailers are typically concerned about product lifecycle management and the potential impact the different stages have on their business, they believe products are actually a great way to show consumers the role they play in that life cycle
Why is life cycle management important
- Optimization of time (such as time to market), cost and quality
- Optimization of communication and interdisciplinary collaboration processes, including suppliers, customers, partners, assistance / support and other stakeholders
- Optimization of information for safety monitoring and component control
- Optimized management of construction material accounts, material production accounts and various documents
- Product data management automation
- Integrate data with other business processes, eg. in corporate resource planning
- More efficient and profitable sales channels
- Higher return on investment from advertising campaigns
- Extend the life of your product by adapting your approach throughout the life cycle
- Proper and profitable end-of-life product management
Conclusion
Life Cycle management throughout the product life cycle is essential. The key is to be prepared to adapt your sales, marketing, pricing and promotion strategies at each stage. Taking this approach will increase the longevity and profitability of your product in the market. Furthermore, companies can change the information collected about a product to develop something new. Any data collected, stored and used during the previous product period can be relevant in creating new and innovative market ideas.
Cutting costs is the ultimate goal. Sounds like a long time to improve product condition, save money, and increase productivity. However, with Lifecycle Management, this is an accepted reality.