Consultants in Lean Manufacturing Á Manufacturing Strategy

Consultants in Lean & Manufacturing Strategy


lean article mnu lead-in

Product Life Cycles

Issues In Manufacturing Strategy

Product Life CyclesThe Product Life Cycle is mostly considered a Marketing and Product Design issue. But there are important implications for Manufacturing and Manufacturing Strategy as well. This article gives an overview of the traditional discussion of life cycles and extends that discussion to Manufacturing Strategy.

The concept of a Product Life Cycle has been around for almost forever. Until Levitt's 1965 article appeared in HBR it seemed to have little use other than as a vague framework for theoretical discussion. Levitt showed how it should lead to specific policies and actions. However, it was still about marketing until Hayes & Wheelwright's article .

The most common life-cycle curve as shown above is a very approximate representation. The overall timeframe may vary from a few months to decades or even centuries. The life cycle of the proverbial buggywip was several centuries; that of the hula hoop about a year. Not only the timeframe but the shape of the curve can be quite different for certain products and markets.

iPhone Life CycleApple, for example, has considerably distorted the usual curve. Apple's products are typically introduced with great fanfare and sales immediately skyrocket, level off and abruptly decline as the next model is introduced in about a year. This is a marvelous approach for companies that can attain the status of a fashion icon. However, the approach carries a certain risk; in the event of a quality defect, the firm's reputation can be severely damaged for many years. Microsoft demonstrated this with Windows Vista.

Development Phase

Marketing and Product Design have most of the work during development. However, Manufacturing has a valuable long-term role by ensuring that the product is easy to manufacture with high quality.

Introduction Phase

Most products start with pilot production on a small scale. Manufacturing must plan for this and also plan for the  frequent design changes that often occur in the early phases of a product's life. Quality is critical at this point because defective product's can damage the reputation of the product or even the entire firm. Such a reputation for poor quality may prevent or at least stifle further growth.

One exception to the above paragraph is illustrated by Apple's strategy. Here, the manufacturing challenge is to increase production from pilot to a very large volume in a very short time. Failure to satisfy the immediate demand means lost sales and, more importantly, lost market share. Quality becomes even more critical with this kind of marketing strategy.

Growth Phase

During growth the manufacturing challenge is to increase production to meet increasing demand while maintaining quality and controlling cost. Ideally, capacity would be added in small steps slightly ahead of demand. But this is often difficult because of process technology limitations.

Increased variety is usually seen in this phase as well. Manufacturing must accommodate it without adding too much cost.

Maturity Phase

By the time the product has matured, competitors are often in the market and cost must be reduced to maintain profits without sacrificing market share. Variety is likely to grow further as marketing develops new variations to extend the product life.

Decline Phase

As a product declines Manufacturing must scale down processes and prune unprofitable variations while maintaining profitability as long as possible.


Stage Marketing/Design Perspectives Manufacturing Perspectives
Development
  •  Focus on product features, potential markets and marketing strategy.

  • Ensure that features meet market requirements.

  • Develop a design that has quality from the very start.

  • Ensure producibility

  • Initial planning for future stage processes and technologies.

Introduction
  • Determine pricing (Market Penetration or Skimming Strategy).

  • Identify & Correct flaws quickly.

  • Quality from the start is imperative.

  • Develop a process that is economically feasible at a small scale but can be scaled up as quickly or as slowly as required.

  • Develop a process that can accommodate design changes.

Growth
  • Expand into new markets and uses.

  • Expand product lines.

  • Accommodate increased variety.

  • Employ leading capacity strategy for growth.

Maturity
  • Extend product life through promotion, design enhancements, new uses and options.

  • Protect profits.

  • Protect market share.

  • Aggressively reduce cost.
  • Invest In More Productive Equipment
  • Accommodate increased variety & model changes brought about by life-extension strategies.
Decline
  • Aggressively prune unprofitable products and variety.

  • Scale down production in orderly manner.

  • Aggressively prune unprofitable varieties.


Summary

The Product Life Cycle is among the many issues addressed in an effective Manufacturing Strategy. It can affect process design, plant layout, scheduling and other elements. It is at the often-contentious interface between Marketing and Manufacturing Strategies. The Key Manufacturing Task will change depending on the Life Cycle Phase.

Apple supplies us with yet another example in their failure to integrate Product Life Cycle thinking into their ill-fated Fremont, California factory.

References

Levitt, Theodore, Exploit The Product Life Cycle, Harvard Business Review, Nov-Dec, 1965.

Hayes, Robert H. and Wheelwright, Steven C., Link Manufacturing Process and Life Cycles, Harvard Business Review, JAN-FEB, 1979.

Hayes, Robert H. and Wheelwright, Steven C., Restoring Our Competitive Edge, John Wiley & Sons, New York, 1984.

■ ■ ■ ■ ■ ■ ■

Contact Webmaster

©_Permissions

OCT 2013     ©_Permissions

Strategos-International:  North America - Europe - Australia

Strategos Footer

Lean Briefing Logo

The Free Newsletter

of Lean

Manufacturing Strategy

Lean Briefing Archives

The Strategos Guide To Value Stream and Process Mapping goes far beyond symbols and arrows. In over 163 pages it tells the reader not only how to do it but what to do with it. More info...

Strategos Guide to Value Stream & Process Mapping