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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
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 throughout the entire product life cycle.
Product lifecycle management: from isolated product management to integrated PLM
Product lifecycle management (PLM) has evolved from a traditional approach to a central strategy in companies. Building on the theoretical foundations, PLM enables holistic control of all product phases. In practice, it has become indispensable to meet the increasing demands for efficiency, quality and market dynamics. The need for transformation arises from the need to break down information silos and promote cross-divisional collaboration.
Old: Traditional product management
Traditional approach:
In traditional product management, development, production and sales departments often worked independently of each other. Information was exchanged manually, usually via emails or paper documents. Tools such as simple spreadsheets were used for data management, which could lead to inconsistencies and data loss. The lack of integration made change management more difficult and led to delays. The main problems were long development cycles, increased costs due to redundant processes and a high risk of errors due to inadequate communication between departments.
New: Digital product life cycle management
Product Lifecycle Management (PLM):
The modern PLM approach integrates all processes and data along the product life cycle in a central platform. The use of advanced software solutions shortens development times and reduces costs. Key innovations such as 3D modeling, virtual prototypes and real-time collaboration enable teams to work more efficiently. PLM improves transparency across the entire process and makes change management much easier. Practical benefits include a reduction in time-to-market of up to 50% and an increase in the first-time-right rate in production.
Practical example: Implementation of PLM in the automotive industry
A leading car manufacturer has introduced PLM to optimize the development processes of its vehicles. The digital networking of design, engineering and production has reduced development times for new models by 30%. The introduction of a central data management system reduced errors caused by version conflicts by 40%. In addition material costs by 15%, as PLM enabled the company to better manage purchasing and optimize supply chains. Overall, this led to an increase in competitiveness and customer satisfaction.
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.
