The product life cycles
are getting shorter
in today's economy.
Changes
in technology and consumer demand creates more
changing markets where a product can become obsolete
almost as
it reaches the market.
There are many
recent examples of shrink
life cycles. Maybe the personal computer market
is the one with the quickest
changes and the
highest rate of product
redundancy.
Simply, computer
after 6 months can be devaluated by 50% due to
changes
of the technology.
Such shortening of life cycles creates significant
problems for supply
chain management. Reducing life cycles demand shorter
lead times.
Traditional definition of lead time need to
change.
Lead
time
is traditionally defined as the elapsed time from receipt of
customer order to delivery. In today's
environment there is a
wider perspective that should be taken into
account. The real
lead time is the time
from the design board, material procurement,
production and distribution to the end market. This is the concept of strategic lead
time and the management of this time range is the
key to success in managing supply chain.
There
are already situations occurring where the life
cycle of the products shorter than
the strategic lead time. This means that the life
of a product on the market
is less than the time it takes to design, procure,
produce and
distribute that same product. The implications of
this are significant
for supply chain. In a global
context the problem is more complex due to
longer transportation times involved.
The
only way of achieving success in such
markets is to
accelerate movement through the supply chain and
to make a whole logistics system far
more flexible and responsive to these
fast-changing trends in markets, in order to
maintain the optimal lead time.
