Question

Analyze component procurement strategy as a function of the product life cycle. Specially, identify the appropriate when a product is at a growth stage, (introduction), maturity (steady state), and end-of-life.

Answer 1

1. PRODUCT CONCEPTION & DESIGN

All manufacturing companies start with an idea. An idea of a particular product they want to manufacture and sell because there is market-driven need for that product. Successful companies not only discern how to manufacture and sell such products, but also how to protect their ideas from other companies similarly situated. Whether they are manufacturing a simple toaster oven or the heat shield that protects a Space Shuttle from disintegrating in space, manufacturers must make full use of the patent and trademark process to secure the rights to their technology or innovation and protect their branding against infringement or misappropriation by outsiders. Prudent manufacturers will also protect themselves from the inside as well, by adopting procedures to induce their most vital assets, their people, to remain loyal both during and after their employment

2. PRODUCT MANUFACTURE & PROCUREMENT

A sound and efficient process for the procurement of its own requirements is vital to the success of every manufacturer because a manufacturer cannot sell what it cannot purchase or make.   The procurement needs of each manufacturer are unique, but common needs include contracting for sourced products, component parts and/or raw materials, developing the capacity for in-house manufacturing and/or assembly, and commissioning independent product testing and certification. Regulatory compliance needs of manufacturers typically include import and/or export licensing, product safety compliance and avoidance of improper payments. Addressing supplier insolvency and bankruptcy is not only a credit concern, but can be vital to maintaining a manufacturer’s supply chain continuity and product availability. Reliable product procurement can also be achieved through acquisitions to enable product line and geographic expansion.

3. PRODUCT MARKETING

A critical aspect of any business is the interaction between the company and its customer. Whether through traditional advertising, social media or the design of a product and its packaging, companies spend a lot of time and money trying to leave an impression with their customers. The right impression is priceless, while the wrong impression can be costly.

4. PRODUCT DISTRIBUTION

. Having appropriate transportation, manufacturer’s representative, distributor, and customer contracts in place can assure that all counterparties to the distribution process are committed to the manufacturer’s distribution plan. These contracts must be coordinated with the manufacturer’s distribution policies such as its Minimum Advertised Price Policy, Authorized Reseller Policy and Co-op Advertising Policy. Additionally, the contracts and policies must comply with a variety of state and federal laws, including antitrust laws that limit a manufacture’s ability to sell at different prices, engage in resale price maintenance or otherwise restrict the sale of its products by its distribution channel counterparties. Manufacturers must also be mindful of a plethora of other laws, including statutes that limit its ability to terminate distribution channel counterparties.

Transportation/Logistics/Warehousing Contracts

Transportation logistics and warehousing involve a multitude of contractual and compliance issues. The effective and efficient distribution of products from the point of manufacture to the point of consumption often requires coordination among manufacturers, carriers, third-party intermediaries, retailers, and distributors across diverse transport modalities. Manufacturers must navigate regulatory compliance issues, including hazardous materials transportation, safety, security and customs requirements, and must also implement appropriate transportation and warehousing contracts to account for risk of loss associated with casualty, freight loss and freight damage claims.

5. POST PRODUCT SALE

Once the product is fully designed, manufactured, marketed and ultimately sold, product issues for manufacturers remain. In the consumer product context, manufacturers must focus on product safety issues to ensure that they are complying with the Consumer Product Safety Improvement Act . Failure to heed to its regulatory compliance responsibilities could subject a manufacturer to product recalls, both voluntary and at the request of the Consumer Product Safety Commission. These recalls have the potential to cause a manufacturer to incur substantial penalties.

Aside from product safety issues, manufacturers also must evaluate and develop a strategy regarding generic product warranty claims and customer returns, including developing a program for providing product service and replacement parts to its customers that experience performance issues or failure of the products. manufacturer. Creating an environment with your business partners where recovery of these costs are common-place and not viewed as adversarial may be critical to the long term viability of a product line.