Life Cycle Management cross-functional applicability:
While life cycle management (LCM) has a dramatic effect on service effectiveness and profitability, all functions - development, manufacturing, logistics, marketing, and sales - benefit from it. LCM monitors product performance-to-goal over the entire product life cycle, from new product introduction (NPI) through service end-of-life (EOL).

Since most companies focus a great deal of attention on getting products out the door, the NPI process forms a natural basis for all subsequent product-related activity. A well designed and implemented NPI process usually results in a "win-win" situation for every participating group. Understanding how each function's actions and decisions affect the others is essential to maximize achieving corporate objectives.

Since many companies follow an "over the wall" methodology in NPI, let us follow a typical product through such a process. Someone, usually in marketing or development, thinks of a great new product or solution to meet the market's needs. Development takes in the idea and designs a great product. When just about done, development throws the product "over the wall" to manufacturing, which has to scramble to manufacture the product at marketing's designated price point. The first time service hears of the new product is when a customer calls in for help. Service now has to scramble to develop the required expertise, create the needed spares, plan distribution, etc.

Since manufacturing and service have had to respond with insufficient preparation, their responses are sub-optimal in terms of cost structures and process. This in turn degrades their ability to provide the firm with the returns it needs. Since service brings in as much as 20 to 25 percent of the total revenue with gross margins in the 40 percent range in many firms, sub-optimizing service performance can seriously impact gross margins.

NPI - foundation for successful LCM
Let us now look at the NPI process that enables corporate-wide optimization of resources and yields the best possible returns. Remember that the NPI process is the basis for successful LCM. Based on marketing's assessment of market needs and conditions, including broad functional specifications, price points, and service needs, each function creates a set of product requirements that allow them to satisfy internal objectives. After all areas study these individual product requirements in a joint forum and resolve conflicting requirements, a combined set of product requirements is sent to development for creating the final set of product specifications.

An essential sub-set of these final specifications should include product performance goals and various alternatives in case actual performance falls short of goal. While always subject to change, specifying performance goals in advance creates an objective standard to measure against. Service, in particular, should monitor actual field performance to goals. Deviations from performance - either above or below - are important. Exceeding performance goals usually indicates over-engineering and attendant excess costs; sub-par performance means the service organization will have to devote resources in excess of plan to compensate for the shortfall until corrected.

During the development process, the other functions monitor progress and get ready to play their parts. Manufacturing can include service needs in its planning, and gains from scaling production accordingly. Service personnel monitor the product, get their plans ready, and have trained personnel ready where needed. Spares and logistics are in place to support customers.

Since all functions have integrated their tasks, product launch is usually relatively smooth with no major glitches. Customers are pleased, and this starts the product off with a good reputation in the field. This often attracts even more customers than was anticipated.

LCM post product release:
Once the product is in the field, service continues maintenance and monitors technical performance, while marketing monitors sales performance. When the product starts to falter, they can initiate any number of corrective programs, from "mid-life kickers" to field and engineering change orders. These actions, when done in a timely manner, usually enable a quick recovery at minimal cost. Service may initiate maintenance price adjustments to keep revenues and margins at desired levels.

When service finally sees maintenance costs starting their inexorable rise as the product ages, replacement parts become scarce or unavailable, and maintaining adequate levels of expertise becomes increasingly expensive, it is time to declare EOL. The product will no longer be supported except on a best-efforts or time and materials basis.

At this time, both marketing and service should prepare a transition plan that guides existing customers off the EOL product and on to an acceptable replacement. This plan will help maintain the customer base to preclude customers looking at competitors' products and avoid attrition.

Summary
All LCM requires is a dedication to a cooperative corporate environment and a change from maximizing any individual function's effectiveness to a focus on optimizing the corporate bottom line. Planning and executing these common sense processes will also help companies maintain a strong and loyal customer base, and thus help ensure continued strength and prosperity.