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The impact of the product lifecycle on business logistics

According to Jooste (2014), marketing is defined as “… the process by which organisations satisfy the needs of consumers by creating, communicating and delivering value for customers in the form of ideas, goods and services to facilitate satisfying exchange relationships, in ways that benefit both organisations and customers”.

Pienaar and Vogt (2012) posit that business logistics is “…concerned with the inbound movement of materials and supplies and the outbound movement of finished products. The goal is the delivery of the finished products required by the marketing department to the point where they are needed and when they are needed in the most economic fashion.”

So, in terms of Pienaar and Vogt’s definition, logistics’ key function is to convey inputs into the organisation in the form of materials and components etcetera and then deliver the end-goods that were developed by means of the transformation process (operations) to consumers at the right time, the right place and price to the right person in the right condition and quantity. The relationship between the two functions is that of co-dependence; marketing cannot survive without logistics and logistics has no place in the economy without the need-satisfying offerings that are uncovered and designed under the umbrella of the marketing effort.

Essentially, marketing is focused on four key elements known as the four Ps: product, price, promotion and place (distribution), whereas business logistics is made up of several activities such as demand forecasting, site selection and facility design, procurement, materials handling, packaging, warehouse management, inventory management, order processing, logistics communication, transportation, reverse logistics and customer service.

Addressing needs and wants

Every logistics activity, as mentioned above, is required by marketing to convey inputs into the organisation and to deliver the outputs that have been developed by operations for targeted customers in such a way that the needs and wants of such customers may be satisfied in a cost-efficient manner.

All products have a lifecycle; some are of long duration, like Coca Cola, and others extremely short (e.g. a fad). The traditional product lifecycle (PLC) has four stages; the introduction stage where new products are introduced in the market, the growth stage which is characterised by robust sales and profits, the maturation stage where sales have peaked and finally the decline stage where the demand for the offering starts to diminish as the market becomes saturated with the organisation’s goods and those of competitors.  In order to elongate the life expectancy of the product or service, marketing utilises the marketing mix variables (4Ps) to try to generate sales but like anything in life, the product will experience an eventual sad demise.

Although the traditional PLC as reflected above is an accurate indication of a product’s lifecycle, which starts at market entry and ends at the death of the offering, it is not a true reflection of the entire process because it is void of one of the most important stages; the product conceptualisation and development phase. It is this important juncture (when the product is perceived, conceived and born), that triggers the commercialisation of the offering and its ultimate absorption into the marketplace.

 An organisation that is well-versed in product life cycle management will have the ability and skills to optimise logistics and SCM to benefit its bottom line. Product lifecycle logistics is an approach to treating the supply chain as a continuous network or circle and, in the process, to improve customer service, lower supply chain costs, and where possible, bring in an additional income stream if the form of investment recovery by means of the disposing of dead stock and effective waste management.

The key to realising these savings as well as exceeding customer expectations is to recognise the relationship between the supply chain, business logistics, marketing and the PLC. This will provide a better understanding of the business and if used correctly, it can be used in combat with business adversaries as a result of a competitive advantage.

In the same way, lead time management, in the form of order-to-delivery cycle and the cash-to-cash cycle, will reduce the time it takes to satisfy customer needs and likewise the time it takes an organisation to convert an order into cash. Both forms of lead time management will provide the organisation, compared with slower rivals, with a competitive advantage.