I. Introduction
Taking a product from an abstract idea to an item that’s widely available in the marketplace demands a hands-on approach to prevent things from falling through the cracks. A technique that goes back nearly a century, product lifecycle management (PLM) has for decades been used to improve the efficiency of product development and design.
In recent years, however, a growing number of organizations are realizing the capability of cloud-based PLM software to drive fulfillment benefits. There is a recognition that you can strengthen your supply chain management by deploying PLM from product conception to multi-faceted fulfillment. As your product approaches maturity, it necessitates changes to workflow, supply chain, and fulfillment processes as a means of attaining sales objectives and driving overall business strategy.
But before we get into that and how PLM affects fulfillment, first a definition of PLM.
II. What is PLM?
Product lifecycle management refers to the process of handling a product through the key stages of its life. From its inception, design, development, and production, to growth, maturity, and retirement. PLM covers not just the actual manufacturing of the product but also its marketing. It informs decision-making on everything from product promotion and product pricing to cost-cutting and expansion.
The scale and complexity of PLM today for the average business necessitates the use of PLM software, especially cloud-based. Such software simplifies the tracking and sharing of product data along the entire value chain. From design and manufacturing, to supply chain and asset maintenance. Cloud-based PLM software provides granular visibility on products, requirements, parts, change orders, workflows and documents.
Innovation is crucial for business success and survival. PLM ensures manufacturers can craft the next wave of products affordably and quickly. It helps businesses shorten timelines as well as know when to scale up or scale down manufacturing or adjust marketing efforts.
III. Where do PLM and Fulfillment Meet?
PLM affects fulfillment in multiple ways. Most often though, the two disciplines interact in two major ways — fulfillment software development and the product manufacturing phase.
i. Development of Fulfillment Technologies
Fulfillment technologies may be deployed or leveraged in the different stages of PLM. In fact, PLM is in many respects, a mechanism or building block for fulfillment.
The most common applications of fulfillment software focus on one or more supply chain elements like a product launch, warehousing, transport, inventory forecasting, purchase order, physical flow, and reverse logistics. We are talking about warehouse management systems (WMS), transport management systems (TMS), and other supply chain systems.
More specifically, let’s take a closer look at how fulfillment interplays with each of the three major phases of PLM — introduction, and growth, maturity, and decline.
1. Introduction and Growth
This phase has two stages — design and commercialization.
a. Design
In the design stage, you define product requirements based on research that identifies customer needs and market gaps, or by competitor analysis. That data subsequently feeds into concept introduction, planning, initial design, validation, analysis, development, simulation, prototyping, and user testing.
In this stage, fulfillment software plays an important role in data capture and communication. Information sourced from and/or relayed to multiple stakeholders is used to keep track of inbound goods and stored items. Advanced order management systems oversee the movement of goods to customers. Fulfillment technologies bring together a complex meshwork of order management activities.
b. Commercialization
In the commercialization stage, the product is no longer an idea. Rather, it is launched into the market, and sees rapid growth in production and sales. It starts to expand into new locations and market segments. As the product grows in market prominence, existing players take notice and new rivals emerge. This leads to intense competition.
As a result of the growth in sales and distribution, the subsequent economies of scale may see a steady drop in production costs per unit. At the same time, however, marketing costs could increase as the business aggressively launches into new markets.
During commercialization, the defining characteristic of fulfillment technologies is collaboration. The most successful businesses procure or develop software and tools that harness the power of APIs. APIs deliver multiple advantages but are especially important in providing the flexibility required to adapt, in near real time, to carrier changes, multiple access points, data updates from diverse systems including Excel spreadsheets, and more.
The stakeholders with access to this data would vary depending on need and relevance. Stakeholders here could encompass end-consumers, warehouse professionals, internal procurement, companies using a third-party logistics (3PL) firm to store goods, manufacturers, carriers, shippers, and more. Access would also be siloed in line with the principle of least privileged access.
2. Maturity
At the maturity phase, the product is available almost anywhere where it has sufficient demand. Greater spending on advertising does not do much to increase overall demand. Demand is relatively consistent and the business focuses on safeguarding market share while outcompeting similar products. You may make adjustments to marketing messaging or packaging to reach new segments. Think about how major smartphone manufacturers like Apple and Samsung constantly make relatively minor adjustments to products to keep them looking fresh and unique in consumers’ eyes.
In this phase, fulfillment software evolves in tandem with the product’s market position. Deep integration between disparate systems is necessary to ensure seamless product flow. Global supply chains and distribution are best managed through cloud-based software environments. There is a need for robust sandboxing and testing due to extensive integration. The more complex your product’s customers are, the more complicated the fulfillment software may need to be.
Every business hopes to grow its product’s sales volume and market share. Even at maturity, that is still an aspiration. Opportunities to increase revenue and expand market share may be few and far between at this point but they do exist. Fulfillment software can anticipate such growth by keeping an eye on the future and finding ways to rapidly incorporate more complex requirements and needs as they emerge.
3. Decline
A product in decline sees market share diminish as a result of new technology, market saturation, competitor value-adding enhancements, or price undercutting. You are effectively past peak demand and the only market trend for the product is downwards. It’s time to either plan an exit or a re-imagination.
A business either shifts its attention to a new product or adjusts the existing product to prevent obsolescence. If you opt to withdraw the product, extract key learning points from the evolution of the soon-to-be obsolete product and embed these into the lifecycle of new products. Fulfillment must change as the product approaches its end of life.
While the product itself may be on the verge of retirement, the fulfillment technologies that supported it do not need to be discarded in total. Explore new opportunities to streamline your processes and perhaps roll out separate modules even as the overall relevance of some of the tools experiences a decline. Process-wise, instead of creating an entire operation for a successor product, you can spin out eCommerce, drop shipping, and smaller solutions.
Importantly and as an acknowledgment that logistics and supply chain technology tends to lag behind market changes, it is important that businesses and practitioners developing and using fulfillment technologies constantly explore other SaaS capabilities. This helps to better spot and understand where innovation might be going next.
ii. The Manufacturing Stages of Non-Software/Physical Product PLM
Once parts or goods are manufactured, they are shipped, typically in multiple legs around the world. These items need significant protection as they move, often with multiple options and angles of protection.
For example, a container has different risks when compared to an individual parcel. How do you create a process that mitigates against both sets of risks? How do you engineer boxes? Last-mile fulfillment may require additional study and protection beyond just figuring out how an item is shipped on pallets to a distribution point.
Manufacturing stages of PLM for physical products can tap or extend into fulfillment infrastructure. Typically, this may demand a mix of fulfillment centers and distribution centers depending on operation needs. Note that the key difference between distribution centers and fulfillment centers is the former doesn’t ship to customers directly.
Ordinarily, products will be sent to these warehouses on pallets or in similar standard and secure containers. If you consider the retailer/supplier as the manufacturer’s customer, the warehouse is in the context of this transaction the final destination of the parts or goods. The product remains in these warehouse centers until it is eventually sent to fulfillment centers (for distribution centers) or sold to end consumers (for fulfillment centers).
A business could deploy fulfillment technologies that trigger the delivery of products from the distribution center to the fulfillment center when a consumer order is received. A dashboard would allow easy tracking of the order’s progress while providing regular updates to the consumer. The ordered items are then packed and shipped to consumers from the fulfillment centers.
IV. Software and Physical PLM Should Review the OLM
Order lifecycle management (OLM) is the process of keeping track of and fulfilling a customer order end-to-end. From its origination (online, via call center, or at a store) until the item is delivered. That includes order capture, payment processing, inventory sourcing, picking, packing, and shipping inventory. A typical OLM solution brings together 3PLs, payment system providers, and customer relationship management systems (CRMs).
The efficiency of robust OLM software helps your company cut costs, drive future business and build your brand. Best practice OLM software allows you to see incoming orders from multiple channels, monitor product procurement, identify and adapt to looming product shortages, and track product delivery. Automating returns provides multiple advantages including simplifying customer refunds, accelerating returned items resale, and accessing better credit terms from suppliers.
OLM is about enhanced visibility that helps satisfy customers while ensuring just the right product inventory. Consumers get products quickly, and affordably, with flexibility and the option to return. Businesses in turn find the most profitable method to get products to customers.
For the customers who decide to return a product, OLM ensures a seamless process that elevates customer satisfaction and improves the likelihood of customers doing business with you. Retailers also use OLM software to keep an eye on customer interaction from when they land on the eCommerce website to when they receive their orders.
OLM is effectively a subprocess of PLM. Ergo, it is most successful when it is designed within the overarching context of PLM. When you run a complex supply chain, making sure goods get to customers on time and as per timelines and specifications while placing a lid on inventory costs can be difficult. Even for small and medium-sized businesses with a single product or one sales channel, staying on top of all orders from origination to delivery can be challenging.
Supply chain difficulties may precipitate stockouts. An abrupt fall in demand may cause a surge in inventory. You must also pay attention to returns whereby a certain proportion of orders will, for various reasons, be sent back at tiles all the way to the manufacturer. Making sure this process runs smoothly is vital for PLM and OLM success.
While OLM is closely tied to both the software and physical stages of PLM, OLM originates from fairly versatile channels. For instance, an eCommerce website may be a business’ primary platform for online sales today but that may change to or be complemented by another channel such as Etsy or Instagram. Such versatility may not be as common in PLM processes but the ability of PLM systems to accommodate and/or adapt to these OLM trends should be a factor when organizations are defining their PLM and charting its development. These efforts can help you prepare for small, local changes as well as work to mitigate risk against current global supply chain concerns.
V. Conclusion
For years, PLM solutions were best suited for manufacturing operations in which product complexity, product variability, and supply network density necessitated end-to-end process visibility and control. Over time though, the value of PLM has been acknowledged and integrated in different industries from product conception to order fulfillment as a means of strengthening supply chains.
Fulfillment contributes an interesting mix of software and physical presence for PLM. Effective PLM is more likely to lead to effective fulfillment. And vice versa.
Author: Jake Rheude
Jake Rheude is the Vice President of Marketing for Red Stag Fulfillment, an eCommerce fulfillment warehouse that was born out of eCommerce. He has years of experience in eCommerce and business development. In his free time, Jake enjoys reading about business and sharing his own experience with others.