Each product follows a lifecycle, and each stage requires different management. One of the functions of portfolio management is to keep track of each product's stage as a field in the system and to automatically run business rules associated with that field.
Stages and management policies
Stage
Characteristic
Management priority
Rules triggered in the system
Development
Not for sale yet; there are costs, but no revenue.
Time and scope control
The sale is closed, it is not subject to forecast, and the project cost is capitalized.
Entrance
Low volume, high unit cost, uncertain demand.
Learning and quick feedback
Frequent reviews, tight inventory policy, close margin monitoring.
Growth
Rapid volume growth, capacity pressure
Supply and capacity assurance
Increased safety stock, warning about supplier diversification.
Order constraints, inventory reduction plan, substitute product proposal
Exit / EOL
Sales stop, service commitment continues.
Customer migration and liability management
Last order date, spare parts commitment, service time tracking.
Exit management: the most neglected area.
Launching a product is a more complex process than adding one. If not done correctly, the resulting costs can last for years: unsold inventory, products with service commitments but missing parts, items listed in the catalog but never produced, and customers still waiting for that product.
A structured exit plan includes: final order date, final production date, inventory liquidation plan, substitute product matching, customer and dealer notification, spare parts commitment period, transition of service contracts, documentation archive, and deactivation of system records.
Benefit to the customer
Dead stock and impairment provisions decrease.
Product distribution is managed without creating customer dissatisfaction.
Spare parts and service obligations are recorded.
The catalog consists of products that are actually saleable.