What Is Product Lifecycle Management (PLM)?
Product lifecycle management (PLM) refers to the handling of a good as it moves through the typical stages of its product life: development and introduction, growth, maturity/stability, and decline.
This handling involves both the manufacturing of the good and the marketing of it. The concept of product life cycle helps inform business decision-making, from pricing and promotion to expansion or cost-cutting.
- Product lifecycle management (PLM) handles a firm's approach to the various phases of a product's development through to its ultimate decline.
- Product lifecycle management involves all stages, including the development and manufacturing of a product, to its marketing and customer segmentation.
- The main benefits of project lifecycle management include shortening product development times, knowing when to ramp up or reduce manufacturing efforts, and how to focus marketing efforts.
- Product lifecycle management is tied to product development management, supply chain management, and sales/marketing sales strategies.
- The future of product lifecycle management is filled with innovations associated with technological advancements, improved communications, and environmental sustainability.
Understanding Product Lifecycle Management (PLM)
Effective product life cycle management brings together the many companies, departments, and employees involved with the product's production to streamline their activities, with the ultimate goal of producing a product that outperforms its competitors, is highly profitable, and lasts as long as consumer demand and technology permit. It goes well beyond just setting up a bill of materials (BOM).
PLM systems help organizations cope with the increasing complexity and engineering challenges of developing new products. They can be considered one of the four cornerstones of a manufacturing corporation's information technology structure, the others being the management of communications with their clients (customer relationship management [CRM]), their dealings with suppliers (supply chain management [SCM]), and their resources within the enterprise (enterprise resource planning [ERP]).
Identifying which stage of its life cycle a product is in determines how it will be marketed. A new product (one in the introduction stage), for example, needs to be explained, while a mature product needs to be differentiated. PLM can affect more fundamental elements of a product, too. Even after it reaches maturity, a product can still grow—especially if it is updated or augmented in some way.
PLM developed as a manufacturing and marketing tool for businesses seeking to maximize the advantage of bringing new products to the market first.
History of Product Lifecycle Management
The concept of a product having stages of life (and the need to manage them) arose as early as 1931. Around 1957, an employee of Booz Allen Hamilton, the advertising agency, theorized a five-step life cycle for goods, beginning with the introduction phase, rising through growth and maturity, and eventually hitting saturation and decline.
One of the first recorded applications of modern PLM occurred with American Motors Corporation (AMC) in 1985. Looking for a way to speed up its product development process to better compete against its larger competitors in 1985. While lacking their larger budgets—AMC decided to emphasize bolstering the product lifecycle of its prime products (particularly Jeeps). Following that strategy, after introducing its compact Jeep Cherokee, the vehicle that launched the modern sport utility vehicle (SUV) market, AMC began the development of a new model that eventually debuted as the Jeep Grand Cherokee.
The first part of its quest for faster product development was the advent of computer-aided design (CAD) software systems that made engineers more productive. The second part of this effort was the new communication system that allowed conflicts to be resolved faster, as well as reduced costly engineering changes because all drawings and documents were in a central database.
The product data management was so effective that after AMC was purchased by Chrysler, the system was expanded throughout the enterprise, connecting everyone involved in designing and building products. By adopting PLM technology, Chrysler was able to become the auto industry's lowest-cost producer by the mid-1990s.
Specific Stages of a Product
Companies may categorize each stage of a product differently. However, in general, there are several distinct stages across the product lifecycle that almost all products experience.
The concept stage involves the initial ideas and planning for a new product. This includes market research, identifying customer needs, and determining the feasibility of the product. Often led by the research and development departments, this stage kicks off the product lifecycle as it is where the ideas are generated.
In the design stage, the product is planned, developed and tested. This involves creating product prototypes, refining the design and ensuring that it meets all regulatory and safety requirements. Again, companies often must commit research and development costs in this design stage as something that has never existed before must be created and tested.
If the company feels confident in its product and feels there is a market for the product, the product goes to the production stage. This stage involves the manufacture of the product including sourcing raw materials, assembling components, and testing the final product. At this point, the company should have a fully-fleshed out product and should not be continually tweaking the design.
Now that the product is made, it moves to the sales stage. This stage involves promoting and selling the product to customers. This includes advertising, sales promotions, and pricing strategies. In many cases, the sales stage and production stage occur concurrently as a company must try to forecast how many sales will occur (and thus need to be manufactured).
The support stage involves providing ongoing support to customers after they have purchased the product. This includes customer service, warranties, and repairs. This may also relate to ongoing trainings or services provided to new owners to better enhance their user experience (i.e. tutorials on how to use their new technology).
Whether competitors have delivered a better product or the product is simply no longer demanded by the market, the product lifecycle ends with the product being retired. This stage involves the end-of-life of the product, including disposal, recycling or re-purposing of the good. In many cases, successful products will be simply enhanced through future iterations (i.e. consider each generation of the iPhone).
Product lifecycle management is never linear. Every product will have varying paths and timelines for each stage.
Benefits of Product Lifecycle Management
Sound product lifecycle management has many benefits such as getting the product to market faster, putting a higher quality product on the market, improving product safety, increasing sales opportunities, and reducing errors and waste. Specialized computer software is available to assist with PLM through functions such as document management, design integration, and process management.
Product lifecycle management strives to improve product quality and reliability. Companies may need to spend less on prototyping due to a clearer structure of planning and innovating. This also leads to potentially more accurate and timely requests for quotes (RFQ).
Companies that are intentionally during the retirement stage may be able to incur savings due to the reuse of information. This also means companies can plan ahead and minimize waste or reduce material costs due to a greater understanding of what phase each product of theirs is currently in.
Elements of Product Lifecycle Management
Product lifecycle management requires extensive collaboration between departments across the entire life of a product.
Product lifecycle management often begins with product data management (PDM). PDM is the management of all product-related data such as designs, specifications, bills of materials, and engineering change orders. This streamlined process allows different departments to more seamlessly collaborate as a product goes from one stage to the next.
This process also often requires a product product design repository. This database of information involves the creation of new products, ideas, designs, prototypes, and what tests have been performed on each one of them.
Because different goods must flow in from different suppliers across the entire lifecycle, product lifecycle management is also often closely related to supply chain management. This ensures that, regardless of what stage a product is in, the company is able to procure, plan, gather, and distribute resources.
Last, there are many elements to consider as products are used and enter the later stages of its life. Sales and marketing departments must collaborate heavily to devise appropriate promotion and selling strategies. This may also coincide with service and support offerings, especially as the company transitions away from a product or offers end-of-life incentives as part of sales. This may also include recycling or redistribution services for items to be disposed of with consideration.
Sometimes, products are re-issued after "retirement". Consider 10-year anniversary re-releases of successful video games with new, rebranded content.
Measuring Product Lifecycles
Companies must often use a combination of measurement methods to best know when to transition a good from one stage to the next. This is especially important once a product has been released and a company must decide when to transition away from offering the good. In general, there are several types of measurement methods such as:
- Sales Data: One of the most obvious ways to measure a product's lifecycle is by looking at its sales data over time. Sales trends can indicate when a product is growing in popularity, plateauing, or declining. This information may naturally signal to a company when it is time to ramp down production, marketing, or offerings of the product. Most companies may exclude expenses and only look at product revenue, though costs play a factor and are worth considering.
- Customer Feedback: Customer feedback can provide valuable insights into a product's lifecycle. Positive feedback early on in a product's life can indicate that it has potential to grow, while negative feedback later in the lifecycle may indicate that it is declining. Customers may also give insights into what shortfalls a product has, indicating to a company whether a new iteration of the product can solve unmet consumer needs.
- Competitor Analysis: Monitoring competitors can also help measure a product's lifecycle. As new products enter the market and others become outdated, a product's lifecycle can be affected. For example, if other companies are offering better, faster, or cheaper goods, it might be time to reevaluate your product. Specific examples of measurements may include profit margins or reviews on innovation.
- Quality of Output: Companies can evaluate their output to decide whether it still makes sense to offer a product. Using specific metrics such as quality of output, production efficiency, or product waste, a company can get an idea of whether a different approach to manufacturing would be more efficient.
- Warranty Claims/Returns: If a company's products continually break down or experience the need for repairs, it might be time to reevaluate the good. This can be measured by interactions with clients for warranty claims, repair requests, dissatisfied reviews, and product returns.
The Future of Product Lifecycle Management
Product lifecycle management isn't going away; however, over time, the nature of products and their stages are likely to shift. As new technology emerges and consumer preferences change, the stages of product lifecycle management may shift to these changes.
The element with the greatest future potential disruption relates to the continual digital transformation of information. Through artificial intelligence, machine learning, or the Internet of Things, companies can collect and analyze data more efficiently than ever at every stage. This will future enhance a company's ability to optimize performance and reduce expenses.
Strives in technology also create opportunities for better communication. Product development and management is becoming more collaborative with cross-functional teams working together to bring products to market. New solutions are being developed to support this trend that allow real-time tools for strategic decisions to be made instantly. These tools continue to make it easier for team members to work together seamlessly regardless of their location.
As consumers become more conscious of the environment, companies can better respond to sustainability demand. Product lifecycle management systems can support this trend by providing tools for measuring and managing sustainability throughout the product lifecycle from design to end-of-life disposal. This includes smart, scalable ways to measure waste or environmental impacts. This also means smarter, cleaner ways to transfer products across the lifecycle or to consumers.
What Are the 4 Stages of Product Life Cycle?
Though more specific stages were discussed earlier, the four broader stages of product life cycle are introduction, growth, maturity, and decline. This covers when a product is created, brought to market, saturates the market, and no longer serves a purpose in the market.
What Is the Difference Between PLM and PPM?
Product lifecycle management usually relates to tracking the different points along the life of a product. PLM helps these professionals control how and when products are made. Product portfolio management indicates which products to create, which are successful, and when it may be time to retire them. PPM is used by businesses to know which products are successful and which should be emphasized.
Why Do PLM Projects Fail?
The product lifecycle management process requires substantial estimates and projections. For example, consider how a company must predict what the sales of an innovative new product will be. Whether the company is overly optimistic, receives bad data information from market participants, or underestimates the manufacturing process, companies won't truly know whether a project will be successful until the product is brought to market and sales numbers start rolling in.
How Do You Manage the Product Lifecycle?
The product lifecycle is managed by ensuring communication can happen across departments. The development departments must be in contact with manufacturing and sales departments to make sure adequate resources are met. In a similar manner, the manufacturing and sales departments must transmit information upstream to allow for future development and improvement of products based on consumer feedback.
The Bottom Line
Product lifecycle management is the process of managing the entire lifecycle of a product. From its conception, design, and manufacturing to its retirement and disposal, a product goes through a lot and passed through management departments. The aim of product lifecycle management is to optimize the development process, improve product quality, reduce time-to-market, and increase profitability.