QUESTION:
High-tech manufacturers face increasing pressure to deliver next-generation products to multiple global markets. Delays in the product-launch process can result in lost profit and market share. In addition, many high-tech companies struggle to manage post-sales processes, such as repairs, returns and product disposal.
More high-tech companies need external partners to help them reduce some of the risks associated with the entire product lifecycle – from launch to end-of-life, according to the fourth-annual Change in the (Supply) Chain survey conducted by IDC Manufacturing Insights. Overall, 59.3% of IDC Change in the Chain respondents indicated a desire for more post-sales support. Another 63.8% of respondents said they need help with fulfillment and distribution activities.
Why is product lifecycle management becoming more challenging for high-tech firms, and what are some steps they can take to manage the process more effectively?
EXPERT ANSWER:
Media hype is pushing more companies toward large-scale, high-profile product-launch events. Companies want, and in many cases rely on, publicity to help drive early sales. This is true particularly in the high-tech space as gadget proliferation puts pressure on margins and shortens the product lifecycle. Companies have a very short time period to sell a lot of product. As the attention given to product launches increases, high-tech firms are under increasing pressure to flawlessly manage logistics operations. As you can imagine, launching products across various retail and e-commerce channels in multiple geographies, all on the same day, is very complicated.
To effectively manage the product-launch process, both cross-functional and cross-supplier collaboration are crucial. Companies often fail to realize how important collaboration within their own four walls is to the success of a product launch. In an ideal product-launch environment, a company’s operations department should constantly receive information about the product launch from other parts of the organization. For example, marketing must communicate the desired launch-day experience and real-time sales forecasts, finance must help balance inventory carrying costs with speed-to-market and operations should clearly articulate limitations with various suppliers and channel partners. Also, the lines of communication should be established months prior to the desired launch day.
During the collaborative process the team should discuss many planning scenarios. But if there is one area that must be highlighted it’s contingency planning. Some of the questions the cross-functional group should ask themselves include: What happens to your launch if the manufacturing timeline gets pushed back a week? How will the company react to a key supplier not meeting expectations? What will happen if customers are not home on the launch day to receive their e-commerce orders?
In addition, companies should consider contingency planning for manufacturing and logistics variability, shifts in demand and how to manage negotiations with retailers prior to the launch.
Once high-tech firms have implemented strategies to manage each scenario, an external partner, such as a third-party logistics (3PL) provider, can help these companies manage their large-scale, day-specific product launches. This includes the ability to move inventory from country to country across a countless number of channels as they prepare for the product launch. High-tech firms can also lease warehouse space from a 3PL. In addition, outsourcing order fulfillment can reduce unnecessary touch points and increase speed-to-customer.Having a 3PL act as the importer of record can also help companies clear certain legal hurdles as they expand into new geographies.
After the product launch, one of the greatest areas of weakness many high-tech firms contend with is post-sales operations. Companies that do not focus on post-sales strategies are not only missing out on potential revenue streams, these companies could also be missing the mark in terms of customer satisfaction. In the IDC Change in the Chain survey, only 47% of high-tech executives said they believe they are market leaders in post-sales support. A 3PL can help companies manage repairs, recycling, refurbishing and replacement of a product throughout its lifecycle.
