Product Life Cycle
TermiKnowledge - Supply Chain, Procurement and Inventory Terminologies
A product life cycle outlines a sequence of stages in a company's lifespan; these stages are termed a Product Life Cycle and are applicable for almost all types of tangible assets. Product Life Cycles are usually used for calculating the lifecycle of the products; including the normal operational phases through which an item passes through its lifespan. The length of a Product Life Cycle, also known as the product life cycle or the PLC, is derived from the product characteristics, current cost of production, service and support needs, expected sales and life-cycle costs. The shorter the product life cycle the more cost effective and productive the product would be.
Another use of Product Life Cycle is for calculating the capacity requirements and budgeting for a new product or an existing one. This cycle can also be used by managers to determine the quantity of inventory required for a specific period of time or to forecast how many units of a certain product will be needed for a certain stage of production. Also, Product Life Cycle can be utilized by inventory planners to assess inventories in various conditions in terms of demand, supply, and price. Inventory planners can use the Product Life Cycle to determine if there is sufficient demand for a product during a specific stage of production, forecast future demand based on available supply, or make decisions about where inventory should be placed when demand for that inventory is expected to be high.
Product Life Cycle is directly related to the ultimate goal of successful supply chain management. For a company to succeed in establishing and maintaining a successful supply chain management system, it must have a good understanding of its product lifecycles; by doing so, managers will be better able to establish and meet their company's supply chain management goals and objectives. By learning about product lifecycles, managers will be better able to understand and manage the resources that they have. They will also be better equipped to establish and maintain effective supply chain management systems that effectively ensure the company's long-term viability. Finally, by taking a holistic view of inventory management and determining the relationship between inventories and customer requirements, managers can effectively reduce the cost of maintaining inventories.
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