Product lifecycle management (PLM) refers to developing and evolving products to graduate through different stages, reach target customers, and win the competition. The objective of product lifecycle management has been to profit from the development and evolution of products in meeting unfolding customer preferences better by leveraging technology and externality possibilities. Management challenges and priorities depend on the product lifecycle stages: (i) development, (ii) introduction, (iii) growth, (iv) maturity, and (v) decline.
Product lifecycle management involves dealing with seven issues: (i) identifying opportunities, threats, and optimum timing; (ii) knowing and responding to customer preferences; (iii) acquiring technologies and refining and fusing them; (iv) innovating, evolving and producing products; (v) developing global supply and distribution chains; (vi) anticipating competition responses and optimally responding them for gaining market power; and (vii) catalyzing and leveraging externalities.
- Product lifecycle management refers to a systematic approach of dealing with issues arising at different stages of the lifecycle for tuning uncertain possibilities into profit-making success.
- A great idea, patent protection, seed capital, and heroic art are not good enough to turn loss-making beginnings into profit and sustain it.
- Product lifecycle management has been gaining growing importance due to the increasing investment need for product development, growing uncertainty, and intensifying competition.
- Product lifecycle management success depends on evolving products and winning competition to meet consumers’ expectations better than ever before by leveraging technology possibilities and externalities.
Factors creating the importance of product lifecycle management
There has been a growing importance of product lifecycle management. Some of the underlying factors are:
- A single idea and its patent are not good enough to ensure profit from the development of a new product.
- Irrespective of greatness, invariably, all products begin the journey at a loss, and the path of reaching profit has been getting more prolonged and increasingly unpredictable.
- Unlike in the past, products are not static; they are amenable to evolution due to unfolding consumer preferences, technology possibilities, and externalities.
- The evolution of the product is a must to respond to competition and snatch market shares from pioneers.
- Policies are in favor of competition and globalization.
- Sourcing specialization from global partners is gaining importance due to the increasing scope of value addition, productivity, and efficiency through sourcing ideas from multiple sources.
- Attaining and sustaining success through product evolution and market power accumulation in the competition space have been gaining increasing traction.
- Imitation and replication have been losing profit-making opportunities.
- The threat of Kodak moment due to migration of Innovation epicenter through reinvention has been gaining momentum due to globalization and understanding of innovation dynamics.
- Growing Wealth creation importance from education and R&D from the idea economy has been fueling investment and competition in idea flow–accelerating the evolution and reinvention of products.
Importance and benefits of product lifecycle management
Invariably, all new products begin the journey at a loss. The natural tendency of products is to keep accumulating losses and exit the market, causing the wastage of innovators’ resources and time. Hence, for turning loss into profit, product lifecycle management is paramount. It plays a vital role in synchronizing consumer preferences and technology possibilities, exploiting the global supply and distribution system, addressing productivity, effectiveness, and efficiency, and winning the competition.
Some of the significant benefits of product lifecycle management are as follows:
- proper timing and optimal capacity—figuring out the right time and developing the optimum capacity are two critical challenges in developing, evolving, and sustaining a product in the market.
- appropriate match between consumer preferences and innovation possibilities—despite the greatness, ideas do not show success suddenly. It requires an evolution process for creating resonance between unfolding consumer preferences and innovation possibilities turn after turn—creating a flywheel effect.
- maximum efficiency and productivity—through prudent management practice, efficiency and product of R&D efforts, idea utilization, and production and distribution could be ensured.
- effective and efficient response to competition—the evolution of products is a great tool to win the competition race. Both over and under-response are detrimental. An optimal response needs to keep unfolding over years and decades to sustain the product in the market and win the race.
- optimum global supply and distribution system—no single producer can afford to produce all the components and possess all the resources for supply, production and distribution. Moreover, the necessity and appropriateness keep changing along with the product life cycle stages. Hence, product lifecycle management has a crucial role in ensuring optimization.
Product lifecycle management issues and process
Product life management needs to focus on a set of issues to derive plausible benefits. For a systematic and predictable response, an institutional process should be developed. Significant product lifecycle management issues are as follows:
- identifying opportunities, threats and optimum timing—demands monitoring and analyzing for deciding about interventions at the right time.
- knowing and responding to customer preferences—gathering feedback and pursuing empathy and Passion for Perfection.
- acquiring technologies, and refining and fusing them—technology acquisition, advancement, and fusion are highly important for meeting customer expectations better than competitors.
- innovating, evolving, and producing products—products must evolve and be produced through global partnerships.
- developing global supply and distribution chains—requires meticulous management engagement for developing a worldwide supply and distribution system.
- anticipating competition and responding to them optimally in gaining market power—as competitors will keep responding with imitation, replication, and innovation, there has been management exercise to anticipate and optimally respond.
- catalyzing and leveraging externalities—unfolding externalities play a helpful role in evolving innovation and increasing adoption.
The emergence of product lifecycle management as a professional discipline took time. Unlike in the past, products are not the outcome of a single great idea. They are not static, either. As opposed to the outcome of a single idea, modern products have been evolving by accumulating a Flow of Ideas. As a result, patenting has not been offering a sure profit-making option. Besides, in contemporary times, irrespective of the idea’s greatness, products invariably begin the journey of producing loss-making revenue. Hence, the product lifecycle must be managed to turn the loss into a profit and sustain it. Here are five phases of development of product lifecycle management discipline.
- Edison’s realization that product development was not good enough—although Samuel Hopkins succeeded in profiting from potash making from the first patent issued by the USPTO on July 31, 1790, Edison found that his patents like the Gramophone or Light bulb could not generate profitable revenue. He had to pursue the evolution of them at a faster rate than competitors and develop the supply and distribution system to profit from those great ideas. Such a reality seeded the formation of the product lifecycle and its management.
- Initial work of Otto Kleppner—in 1931, Otto Kleppner developed the precursor of the modern understanding of product lifecycle by articulating that a product goes through three stages: (i) pioneering, (ii) competitive, and (iii) retentive.
- Jones’s theorization of the product lifecycle—while working for Booz, Allen, and Hamilton, in 1957, a man called Jones came up with five stages of the product lifecycle: (i) introduction, (ii) growth, (iii) maturity, (iv) saturation, and (v) decline.
- Clarity of product lifecycle by 1985—realization about product performance and competition affecting market share and profit change with the lifecycle stages started creating the importance of product lifecycle management.
- Modern product lifecycle management—at the dawn of the 21st century, product lifecycle management has emerged as a solid professional discipline for detecting opportunities and optimally responding to them, and evolving them to turn natural loss-making tendencies into profit and sustain them.
Measuring product lifecycles
To understand the situation and make decisions, management needs data. Most significant relevant data are from the following areas:
- Sales data, R&D to revenue ratio, changing performance of matured products and emerging technologies—offer insights about the extendibility of life of matured products, R&D productivity, and the likelihood of pursuing new product development as a reinvention response; provide perceptions for predicting decline and rise of a new wave of creative destruction.
- Technology possibilities, externalities, and suitability of exploitation—data for feasibility and economic viability analysis for new product development
- Global ecosystem capacity for innovation, production, and distribution—offer insights for developing and changing global partnerships of innovation, production, and distribution.
- Customer feedback, quality of products, and willingness to pay for evolution—provide valuable data for evolving products and assess return on additional R&D investment.
- Freely available customers and customers using competing products—offers insights about the likely adoption of newly intruded products and changes of adoption due to evolution.
- Affinity of using existing products—insights about the barriers in terms of quality and cost to be overcome to increase sales.
- Rate of evolution, sustaining pressure, and changes in market power—data pertaining to these insights help assess the competition force, need for releasing successive versions and determine the price-setting capability of the winner.
- Competitor analysis, warranty claims, and returns—these data offer the underlying reasons for gaining and losing the market.
Difference between PLM and PPM
PPM stands for product portfolio management. Hence, product lifecycle management (PLM) is a subset of product portfolio management. Based on the stages of the maturity lifecycle and complementary roles to the family members, PPM management decides the future of products in the portfolio. Contrary to PLM’s part of managing lifecycles of individual products, PPM deals with the issue of which products to create, which are successful, and when it may be time to retire them.
Growing challenges in product lifecycle management
As explained, the product management challenge has been increasing. One of the notable challenges has been the growing investment needed to develop a product. The next is about the long loss-making stage of the life cycle. To make it worse, intensifying competition, changing consumer preferences, and growing technological possibilities have made reaching and sustaining profit increasingly unpredictable. Furthermore, growing ideas of software and connectivity and fundamental scientific discoveries have been fueling increasing scale, scope, and positive externality effects. Consequentially, the winning race has been intensified, resulting in a winner taking it all. Hence, the ability to develop products is not sufficient for making a profit. Instead, the growing urgency of evolving products and winning the competition has been unfolding in product lifecycle management.
Great ideas, seed capital, complementary assets, and heroic characters are no longer sufficient to profit from new product development. The challenge of turning loss-making beginning into profit and sustaining it has been demanding increasingly systematic management practice. Besides, the unfolding opportunity of gaining market power through systematically creating Economies of Scale, scope, and positive externalities through a flow of appropriate ideas has been intensifying product lifecycle management challenges.