When you hear the word life cycle, the first thing that you would most likely think about is that of the product. However life cycles exist everywhere around us and the supply chain is no different!
See also: Why You Should Segment Your Supply Chain
According to the business dictionary: It’s a concept that compares the cyclical nature of families, organizations, processes, products, and systems with the cradle-to-grave life stages (birth, growth, maturity, decay, and death) of living organisms. From a marketing perspective, these stages are re-interpreted as patterns of demand for a good or service from introduction, growth, stagnation, and decline.
So why are these stages of life cycles so important and what do they have to do with improving supply chain performance? How does this inherently lead to advantage for the savvy supply chain professional?
In a nutshell, our organisations have life cycles and so do our supply chains. These life cycles are also natural progressions through the phases of introduction, growth, maturity, decay and death. Once you know where your specific organization is in terms of these stages, suddenly the light bulbs go on and work can progress on the areas that need life cycle extension and renewal. Furthermore, it’s done in a way that is consistent with the needs of the ever-changing, ever-evolving supply chain.
We already know and understand that, when our organisations are evolving and growing, they progress through well-documented stages and phases. Each stage will have very specific and entirely predictable challenges that need to be addressed.
So, to help us deal with these phases we employ very specific types of senior leaders to ensure that they have the right skills, experience and capabilities to be able to lead the organisation through the specific challenges it will encounter.
For example, you might be the developer of a revolutionary (and successful) line of products, but your gradual shift to increased production is creating a leadership crisis as you struggle to oversee day-to-day operations while still improving your line. It then makes sense to hire someone with an already established record of daily management which you need only mentor when it comes to the finer points of your creations.
It’s no different in other areas of your supply chain. When it is going through different phases, we can anticipate the issues/obstacles and challenges that it will need to deal with. And so, we like to try to make sure that we have the right qualities in our senior leaders to ensure that our supply chains continue to evolve in their roles as agents of strategic competitive advantage.
Now while there are several models of supply chain (including Gartner) it is suggested that there are at least four phases in their development. This is when it goes from an enterprise of multiply dysfunctions, to a semi functional one, and then from an integrated enterprise to an extended one.
Operationally though, the supply chain is typically Plan, Source Make, Deliver and Return. It also becomes very apparent to us that we are continually looking at our supply chain strategically in terms of each these more specific aspects and what it is actually doing right now.
So how exactly does this all work? Where is a good place to start when it comes to understanding your current phase of development and forecasting the life cycle of your supply chain?
Let’s start with a larger picture and then gradually look more closely from there. Consider this handy outline by Dr. Ernest L. Hughes, an associate professor of Transportation & Logistics. Here, he describes the maturity level of a supply chain depending on their primary focus.
- Undefined – Mainly focused on cost-reduction, product catalogs and customer requirements.
- Defined – Establishes management practices, enterprise key performance indicators (KPIs).
- Manageable – Optimizes more logistics processes and enterprise policy implementation.
- Collaborative – Reduces lead and response time while emphasizing great customer service.
- Leading – Focuses mainly on the most quality improvements and process synchronization.
Where are you in terms of your supply chain in each of the categories above? You can go into this in depth but you can also just look at the list and assess where you are now, where you’d like to finish the year and where you’d like to aim over the next 18 to 24 months. In fact, some of the most admired supply chains have already gone beyond the fifth (and that was already back in 2014).
You will also notice that each of the phases had several factors that remained constant. Why is that so? It is because these touch upon the three smaller life cycles that exist within many businesses and, if not managed effectively, will affect your business demand and compromise the greater life cycle of your supply chain!.
1. Shelf Life
Whether it is the expiry date of perishables or the warranty of electronics, the shelf life of any product is an obvious concern for consumers. For instance, what good is having pricy ‘high-quality, organic’ fruits and vegetables, when your customer only has less than a week to use them or enjoy them?
A habit of paying attention to the shelf life of a product is a good way to learn about things from the end customer’s perspective.
How often do they spend money replacing and consuming the product? Does it lend to their satisfaction or harm it?
Such questions need to reverberate across all leaders and teams responsible for maintaining a product’s overall life cycle. It is a factor that affects the product’s leadership in the market. It can also indicate a weakness in your operational structure and call for more innovation.
2. Portfolio’s Resilience Against Competition
One of the worst-case scenarios for any company is having several lines of products approaching an unexpectedly short life cycle. It might be because of factors such as volatility or a decision to add a single, new product that may have begun cannibalizing the rest.
But as dire as those situations can be, they are also some of the most preventable especially if you have been paying closer attention to the competition.
Plenty of company and supply chain heads do have a tendency towards complacency when they seem convinced about the strength of their product. But no matter how well-connected or how well-branded your partners are, you can never afford to turn a blind eye to your competitor’s attempt to exploit weaknesses in your product portfolio.
Every attempt by the competition brings them a step closer to challenging your products’ leadership in various areas. They could be trying to be better in terms of delivery, cost, certain features your product lacks etc. Each attempt by itself should already be taken into account when understanding the true life cycle of your products.
Your competitors may only need to beat two or three items on your portfolio in order to greatly diminish your market leadership.
3. Market Expiry
What can be bad news for both you and your competitors is the idea that a market itself has its own lifecycle. Think of how the industries of horse carriages, breeders and stage coach drivers all plummeted after the invention of the automobile.
The life cycle of a market is always something to consider, regardless of how robust it might seem now. If you really have a mind to look at the bigger picture, then you would consider how long your current market will maintain its present state.
Additionally, it can be the springboard for self-disruption, where you prototype and research the next possible innovation that could outdo the current products still on the market. Given the long life of a market, it may be tempting to kick and back and simply rake in profits. However, that time is not finite and what better way to use it than to prepare your organization for the day that it may no longer exist?
The strength of your products’ combined life cycle is only as good as its individual parts. Each individual product can have its own set of life cycles at any given time. It can be as innocuous as the shelf life of an item to your resilience against competitors. Be aware of all life cycles, big and small, at all times whenever you are working to optimize your supply chain.
If you would like further information on your supply chain’s current stage of development, then we can simply arrange an appointment and I’ll gladly guide you with a free consultation.