Integrating Product Life Cycle &

Purchase Strategies
Prepared & Presented by:
Group 10
Dimilkumar Patel (M016-18)

Members
Sonal Shikha (M043-18)
Shivank Shukla (M060-18)
Arindam Saha (M064-18)
 Context
PLC Pros 3
Readily transferrable to other PLC as Integrative
5
disciplines. Model
Led to spin-offs such as the Permits management to make
BCG product matrix, G.E nine adjustments in strategy and
cell product/life cycle matrix tactics which bear directly on
product policy

Availability 2
Descriptive frameworks due to
diversity in each specific PLC cons 4
strategic situation
The PLC and marketing mix
are so intertwined that cause
and effect can not be
distinguished.

Need 1
Need of Prescriptive and
proactive framework for
integration of corporate,
business and functional
strategies.
 Timeline

Brenson identified the
relationship between PLC
and purchasing through
buying patterns..
82 purchasing strategies
cross-classified by stages
of the product life cycle.
Laura Biroy, Stanley Fawcett and
Gregory Magnan published the a model
for the strategic alignment of functional
strategies using the Product Life Cycle
(PLC) as the “common strategic
denominator.”

1967 1977 1997

1975 1984

Hofer identified 54 Anderson and Zeithaml

organizational and found significant
environmental variables differences in performance
affecting the development were associated with
of business strategies. different stages of the PLC.
 Product Life Cycle (PLC)
DECLINE
Unit sales decline at increasing rate
declining profits; product substitution by
distributors; promotional support is
withdrawn; R&D budget is canceled; and Design
manufacturing equipment is sold.
Development and test marketing;
Heavy R&D expenditures;
Uncertainty of the success of the
MATURITY proposed innovation;
Preparation of a marketing plan.
Sales volume increase at a declining rate
profits reaching a plateau and declining
rapidly; aggressive competitors; declining
prices; cost-price squeeze; development of INTRODUCTION
new markets or new product models and
sizes; and special sales inducements or Commence with the full-scale marketing
concessions to customers. Low-unit sales; losses or low profits;
uncertainty of length; product vulnerable to
GROWTH attack from competing items or services;
relatively few distributors; inexperienced
Sales growth rate increasing personnel; product often manufactured in
substantial profits; existence of many pilot plants; product, “debugging”; and initial
distributors; less product vulnerability; use or promotions.
development of full-scale production lines;
heavy amount of manufacturing overtime; and
adding new models of product line.
 Purchasing & PLC

PLC relates resource allocation

to the risks and returns
Insights From predicted, allowing resource

Recent studies
commitment priorities to be
established which are coherent
1
with the strategic and operating The purchasing managers
objectives of the business. must be sensitized to the
importance of planning and
defining strategy for
2 themselves as well as their
potential contribution to
those at a corporate level.
It being an interactive
process will help to
The buyer/seller preserve and enhance an
organization’s competitive
relationship also can be
categorized into stages.
3 edge.
 Data Collection & Research
43 Purchasing Strategies.

International Industry and

25 professional experts

Middle and upper level

559 purchasing managers in durable
good industries were sent
survey forms. 188 responded.

Methodology
 Select the most appropriate stage for
each purchasing strategy
 Rate the level of implementation in own
firm on the scale of 1 to 7.
 Results
Most appropriate strategies
shaded in the table and also
represented graphically.

Influence of PLC on
purchasing believed(4.9) to
be higher than actual use(3.9).

Industries
53% - Maturity stage
31% - Growth stage
9% - Introduction stage
6% - Design stage
1% - Decline stage
Strategies
Growth stage - 39
Maturity stage - 11
Introduction stage - 6
Design stage - 7
Decline stage – 1
 PURCHASING STRATEGIES AND PLC STAGES:
FREQUENCY DISTRIBUTIONS AND IMPLEMENTATION STATUS
Frequency by Row Percentage
Implementation Level
PURCHASING STRATEGIES Design Introduction Growth Maturity Decline
Mean (1=Low, 7=High)
1 2 3 4 5
Competitive Bidding 18 20 34 24 4 5.7
Cost Reduction 10 10 42 35 3 5.6
Centralized Purchasing 13 12 42 29 4 5.2
On-Time In bound Transportation 4 23 53 19 2 5.2
Common Part Number System (CPNS) 28 24 27 19 2 5.1
Early Supplier Involvement (ESI) 60 17 16 6 2 5.1
Forecasting Volume Requirements 8 25 50 16 1 5.1
Supplier Lead time Reduction 7 22 55 15 2 5.1
Performance Evaluations (Ongoing Supplier) 5 13 54 27 1 5
Strategic Alliances 22 17 40 21 0 5
Consolidation of Inbound Shipments 4 11 46 33 6 4.9
Long-term Contracts Negotiations 10 16 42 30 2 4.9
Dual/Multiple Sourcing 18 17 41 18 7 4.8
Total Quality Management(TQM) 18 30 39 13 0 4.8
Large Volume Suppliers 7 10 53 27 4 4.7
Value Analysis (VA) 20 22 35 22 2 4.7
Supplier Rating Programs (Selection Process) 15 20 48 14 3 4.7
Single Sourcing 30 22 20 22 7 4.7
Design For Manufacturing (DFM) 53 19 18 8 2 4.7
Just-In-Time Purchasing (JIT) 7 18 42 30 3 4.6
Make/Buy Analysis 35 18 27 18 3 4.6
 PURCHASING STRATEGIES AND PLC STAGES:
FREQUENCY DISTRIBUTIONS AND IMPLEMENTATION STATUS
Frequency by Row Percentage
Implementation Level
PURCHASING STRATEGIES Design Introduction Growth Maturity Decline
Mean (1=Low, 7=High)
1 2 3 4 5
Purchase of Finished Goods 15 16 33 29 7 4.5
Supplier Certification 13 25 43 17 2 4.5
Forward Buying 1 18 54 26 2 4.4
Supply Base Reduction 10 13 37 34 6 4.4
Statistical Process Control (SPC) 10 29 43 17 1 4.4
New Product Development Teams (NPDT) 55 17 20 5 4 4.4
Part Number Reduction 17 7 38 27 11 4.3
Global Sourcing 20 11 36 31 3 4.2
Supplier Development 17 30 38 14 1 4.2
Commodity Management Teams 14 24 36 20 6 4.1
Purchase of Subassemblies 13 30 29 25 3 4.1
Bundling Service Contracts 1 14 40 34 11 4
Subcontracting 14 11 46 21 8 4
Zero-Based Pricing/Cost-Based (ZBP) 11 19 41 21 8 3.8
Eliminate Incoming Inspection 8 16 39 26 11 3.7
Systems Sourcing 11 20 44 23 2 3.7
Decentralized Purchasing 27 14 19 14 27 3.5
Minority Supplier Programs 14 21 26 27 12 3.5
Electronic Data Interchange(EDI) 15 19 38 27 2 3.5
Benchmarking 20 15 40 25 1 3.1
Countertrade 8 14 35 28 14 2.8
Blanket Ordering 3 14 49 35 0 2
 Design Stage
Focused on proactive
involvement of purchasing
and supply base

Strategies – early supplier

involvement (ESI), design
for manufacturability (DFM),
and new product
development teams(NPDT)
Effective Growth
Minimize Duplication
of efforts
Priorities – Product Minimize excessive
Innovation and Reduction in Inventories
product development time

Decentralized
Purchasing Common Part
Number System

Quick Response in
Sourcing Decisions
Introduction Stage
low-volume production and limited sales

TQM focuses on continuous improvement of

purchasing process

CPNS – prerequisite to effective growth in

multi-divisional organizations

Supplier development and minority supplier

programs increases synergy

Single sourcing with additional focus on

procurement of more sophisticated
assemblies.
 Growth Stage
Flexible Production
• Rapidly changing environment, especially with respect to
product volume during growth stage requires a flexible
production system
• The desirable purchasing strategies are those which
simplify the process and facilitate flexibility such as,
common part numbering system (CPNS), part number
reduction, system sourcing, sourcing of finished goods, and
make/buy analysis
Delivery Dependability
• Consolidation of shipments, just-in-time delivery, and on-
time transportation strategies are all designed to improve
the competitive dimension of delivery dependability and
support these linkages
Quick Response Time
• Firms competing in the area of quick response time may
choose to centralize the purchasing function to streamline
procedures and reduce duplication.
• Improving the accuracy of forecasting also serves to
improve the ability to respond in a timely fashion
Product Quality
• The strategies dedicated to improving product quality are
proactive and preventive in nature. They include supply base
reduction, single sourcing, supplier development, supplier
certification, and supplier rating programs.
• These strategies, used in conjunction with TQM and value
analysis/value engineering (VA/VE) programs, directly affect the
quality of the product and process
Process Innovation
• These include system related changes like electronic data
interchange (EDI) and blanket ordering (BO), or relationship-
oriented changes like strategic alliances, commodity
management teams, countertrade, benchmarking, performance
evaluations, or minority supplier programs.
Cost-Oriented
• The remaining strategies like cost reduction, competitive
bidding, zero-based pricing (ZBP), bundling of service
contracts, global sourcing, and long-term contract fall into a
cost-oriented competitive dimension
 Maturity Stage
Direct cost-cutting strategies In the maturity stage of the life cycle, profit
• It include global sourcing, minority supplier programs, and cost margins are squeezed due to a variety of
reduction. Strategies aimed at volume discount and economies of forces acting in the environment heightened
scale involve using long-term contracts, bundling service contracts, competition, declining prices, and slow
single sourcing, and supply base reduction. market growth.
• Just-in-time (JIT) reduces the costs associated with excess
inventory. In addition, the cost of poor quality is addressed through
JIT, global sourcing, single sourcing, and supply base reduction.
• Firms at this stage of the PLC must implement
strategies that position them to effectively deal with
increased competitive pressures.

• Most of the strategies identified by the purchasing

professionals for the maturity stage are related to
reducing the cost of production.
Market-based strategies
• They are designed to gain access to markets or improve the value-
added product offering include countertrade arrangements, and the
purchasing of subassemblies and finished goods from OEM suppliers.
• Offloading of subassemblies and establishing OEM suppliers can
provide cost-reduction opportunities if external manufacturing costs are
lower than internal operating costs.
Decline Stage
Marked by the rapid decline in unit
sales, product abandonment
possesses unique challenges for
the purchasing department,
including obsolete inventory and
equipment, determination of
adequate levels of service and
support inventory, and maintaining
positive supplier relations.

This stage needs a flexible purchasing Given the shortening of the PLC,
systems (FPS) to support flexible the identification of a decentralized
manufacturing systems (FMS) to purchasing environment as the
accommodate the rapid changes in only appropriate strategy indicates
market demands. Donations to that this stage of the PLC has not
charitable organizations, product received the proper focus by
reengineering, and product substitution industry or academic purchasing
are other potentially useful strategies professionals.
for the decline stage.
 Conclusion
Integrated Strategies
This article has presented a model that can be
used to alleviate some of the difficulties
associated with integrating business and
functional-level strategies. The model is based
on the product life cycle (PLC) concept and
involves relating the business strategy and the
purchasing function through an Integrated
Product Life Cycle (IPLC) model.
Product Positioning
Proper use of this model would support the
product through functional strategies designed
to achieve and maintain the product’s position
in the market. Historically, the terms “product
positioning” or “positioning strategies” were
reserved for the exclusive use of the marketing
domain. To develop a truly effective business
system, the positioning must now be supported
by all functional areas. Integrating these
supportive positioning strategies can now be
accomplished through the IPLC.
Optimised Purchasing
The IPLC model strives to meet two objectives:
first, to provide managers with a tool for
integration and second, to give purchasing
managers a proactive prescriptive guideline for
the effective use of purchasing resources
Future Scope
This article has addressed the alignment of
strategic planning for the purchasing discipline
as part of a three-phased research effort.
Forthcoming research involves extending the
IPLC model to include the manufacturing and
physical distribution functional areas. The
culmination of this project is an IPLC model
incorporating all the functional areas.
Thank You