Some products naturally have a shorter life cycle than others. While they may be highly popular from their introduction and grow quickly, they also have a much shorter maturity phase, and they may decline much more quickly than products with a longer overall lifecycle. Planning for those products may involve a number of key differences from the way you might plan for a product with a longer lifecycle.
A product’s life cycle is the process it goes through between introduction to the market and removal from the market. For some products, life cycles are relatively long. They are a long-term investment in what the market wants. For example, some types of food products are mainstays on the market. While they ebb and flow in popularity, there is no abrupt rise and quick fall from the public eye.
Other products, on the other hand, are designed with a short life cycle. Electronics, for example, often have a relatively short life cycle, with manufacturers expecting customers to replace technology within a few short years, and technology quickly becoming obsolete.
Today’s electronics also have a relatively short shelf life: within just a couple of years, those products are no longer being produced, and customers could not find them on store shelves even if they wanted them.
Fast fashion also intends to involve products with a relatively short life cycle, as do other industries, including toys, that rely on hyping up consumer interest for a short period of time, then replacing them with something else.
There are several things you have to take under consideration when planning for a product with a short life cycle.
Sometimes, as with electronics, short life cycle products are simply replacing an older version of a previous product. In general, you do not expect that new product to remain in production much longer than its predecessors, and those historic products can provide you with valuable insights into what demand will likely look like as your product moves through its lifecycle.
Your demand planning software can provide you with insights into how historic products have performed and how this new product will likely perform in comparison.
When you introduce products with a short life cycle to the market, it’s important to be as agile as possible. That may mean, for example, using an agile supply chain planning solution that can help you keep up with shifts in the market and adapt to them quickly.
Sometimes, demand may be unexpectedly higher than you think for a product, which means that you may need to ramp up production quickly or ensure that you have more of that item in stock than originally anticipated. In other cases, you may find that the product is in considerably lower demand than anticipated.
For example, an unexpected economic downturn could cause your customers to wait longer to upgrade their electronics or replace fast fashion items. As a result, you may need to decrease production or arrange to decrease your initial orders so that you do not end up with considerable product waste.
Your sales team can provide considerable insight into how a short life cycle product is likely to perform when it comes to the market. The sales team has the chance to actually talk to customers every day.
They are listening to their needs, discussing their available options, and learning about what they are likely to actually buy. The sales team may also have more insight into how products have performed historically or what other products might be similar to your new product.
Many types of short life cycle products see heavy demand when they first come to the market. Many consumers are extremely eager to get their hands on a new product from their favorite fashion designer or a new electronic from their preferred brand when it is first released.
Demand for those products, however, may decrease abruptly once those fans have managed to get their hands on those products. If you aren’t prepared for the bullwhip effect, when demand soars immediately after release and comes down just as quickly, you may end up with a great deal of excess inventory.
When you have a short life cycle product, it’s particularly important to maintain full inventory visibility across all your locations.
You want to make sure that you know what inventory you have on hand, where it is, and, when necessary, the best way to transfer it between locations. The longer it takes to transfer that vital inventory, the more dissatisfied customers you may have.
Once you introduce a short life cycle product to the market, you need to carefully track trends in ordering to get a better idea of how that product is actually performing, now that it’s on the market.
Some products may perform unexpectedly well: not only do they start out strong, but demand for those products may remain high as customers discover the new features or benefits of that product and decide that they’re eager to upgrade or to own it.
On the other hand, some products may fizzle out unexpectedly fast. Effective inventory management solutions can help provide you with greater insight into the actual performance of a new product compared to your predictions, which may put you in a better position to make effective decisions about how to manage that inventory.
When you have short life cycle products in your inventory, it’s important to have a comprehensive inventory management solution that can help you look at all the details of those products and offer better overall insight into their performance. At StockIQ, we have solutions that can help with demand planning, inventory management, supply chain management, and more. Contact us today to learn more about our solutions.