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Product life cycle management: definition & important aspects for buyers
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Product life cycle management in a nutshell:
Product life cycle management describes the systematic planning, management and control of a product across all phases of its life, from development to disposal. For purchasing, this enables a forward-looking procurement strategy with optimized cost planning and a timely response to changes in each product phase.
Example: An automotive supplier plans a life cycle of 8 years for a new control unit, whereby purchasing procures 1,000 units/month in the start-up phase (year 1-2), 5,000 units/month in the maturity phase (year 3-6) and 500 units/month in the phase-out phase (year 7-8) and structures the supplier contracts accordingly.
Contents
Introduction to product life cycle management
What is product life cycle management?
Product lifecycle management (PLM) is a strategic approach to the holistic management of all phases of a product - from the idea and development to the market launch and phase-out. It involves the integration of data, processes, business systems and people along the entire value chain. The main goal of PLM is to optimize product development, shorten time-to-market, reduce costs and ensure quality throughout the entire life cycle.
Core elements of product life cycle management
Significance for purchasing
In purchasing, product life cycle management enables proactive involvement in product development, which leads to better procurement strategies and cost efficiencies. Through early collaboration with development and production, procurement risks can be minimized and innovative solutions from suppliers can be integrated. PLM supports purchasing in making supply chains sustainable and ensuring material availability over the entire product life cycle.
Implementation of PLM in purchasing
By integrating product lifecycle management (PLM) into purchasing, procurement processes can be strategically optimized. Early collaboration enables cost savings, promotes innovation and minimizes supplier risks.
Practical example: Successful product launch through integrated purchasing
Case study of an electronics manufacturer:
A company is planning the market launch of a new tablet. Purchasing is already involved in the conception phase.
- Material selection: Purchasing identifies alternative materials that are more cost-effective and increase performance.
- Supplier integration: Close cooperation with key suppliers leads to joint development projects and innovative components.
- Cost optimization: Purchasing costs are reduced by 15% through negotiations and volume bundling.
- Risk minimization: Potential shortages of rare earths are mitigated by diversifying the supplier base.
Result: The tablet is successfully launched on time. Thanks to the collaboration, the profit margin was increased and a competitive advantage was achieved.
Evaluation and strategic findings
✓ Critical success factors
→ Early integration: integration of purchasing as early as the product development phase for maximum cost savings and innovation potential
→ Supplier management: building strategic partnerships with key suppliers for joint development projects
→ Phase-oriented planning: adapting procurement strategies to the respective product life cycle phases
⚠ Challenges and limitations
→ Complexity management: coordination of different stakeholders and harmonization of different requirements
→ Forecast uncertainty: Fluctuating demand volumes in different life cycle phases make long-term planning difficult
→ Technological dynamics: rapid product innovations require flexible procurement strategies
Future trends and implications:
"The integration of PLM and purchasing is being redefined by digital technologies"
→ Digital twins for better product simulations
→ AI-supported demand forecasts over the entire life cycle
→ Blockchain for transparent supply chains
→ Increased circular economy through end-of-life management
Conclusion on product life cycle optimization
Product lifecycle management is an indispensable tool for modern purchasing. Integrating purchasing into the PLM process at an early stage not only enables significant cost savings, but also promotes innovation and minimizes risks in the supply chain. Due to increasing digitalization and new technologies such as AI and blockchain, the strategic importance of PLM will continue to grow. Successful companies will be characterized by the fact that they understand PLM as a holistic approach and integrate purchasing as a strategic partner in all product life cycle phases.
