Picture source: www.xoriant.com
BY PAUL TEMPLIN
INDUSTRIAL ENGINEER – VOLUME 46 NUMBER 5
Many organizations have focused on new product introduction (NPI). But what about managing component or product end of life (EOL)? While not as critical, EOL product line management directly affects the bottom line and customer loyalty.
Basically, you establish that there is a need and then you address the need. We cannot turn customers down without negative reaction, especially if you have a growing product portfolio.
In one newsletter, Sequent Learning Networks asked “why are so many product portfolios burdened with offerings that, having outlived their usefulness, are ignored by the sales force and forsaken by the market? Although their carrying costs may be masked, they consume resources that could be more profitably allocated, and discontinuing such nonperformers should be part of the normal portfolio evaluation cycle.”
Sequent’s argument acknowledged that discontinuing products doesn’t enhance careers. But freeing up unproductive resources is an important responsibility, and businesses and their personnel should understand that when one product’s life ends, people will have other roles managing the product portfolio that they’ve just fortified.
Bureaucratic silos, company culture but short-term metrics create fertile soil for ancient product lines that are panting. As pressure piles up to reduce inventory and maintain profitability, the criticality of managing EOL increases. Portfolio and EOL management requires hard work and long-term planning. And the most critical, discipline, is to manage your product line with eyes wide open and track products as they age. It also to capture tangible and intangible costs.
Ironically, the ability of an organization to manage EOL is arguably as strong an indicator of long-term organizational health as NPI. Healthy organizations make the hard decisions and think past the short term to the long-term consequences of extending or ending the life of a product.
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