Managing Component Life Cycles in Dynamic Technological Environments

Abstract

The existence of product life cycles is a well‐known concept. In certain industries, however, there is evidence to suggest that these product life cycles do not fully capture the dynamics occurring at an individual component level. Moreover, the authors have observed through discussions with suppliers and purchasing managers in high‐tech industries that a series of smaller life cycles exist within the total product life cycle; these smaller cycles are called “component life cycles.” The implications for supply chain management in dealing with these component life cycles in terms of “best practices” are presented to provide a contingency planning framework for materials managers.

Early supplier integration: the dual role of purchasing in new product development

“…The life-cycle perspective of purchasing differs in key aspects from a purely R&D-oriented view of NPD. Purchasing professionals are expected to take a total cost-of-ownership perspective that extends throughout the product's life cycle (Handfield and Pannesi, 1994;Ellram, 1995;Rigby, 1996;Birou et al, 1997). NPD is only the first stage of the life cycle, which then moves into the production phase and then often into a post-production phase when spare parts are needed.…”

Supplier selection problem: a comparison of the total cost of ownership and analytic hierarchy process approaches

“…Though there are other selection and evaluation approaches closely aligned with TCO, such as life-cycle costing (Ellram, 1993), zero-based pricing (Monckza and Trecha, 1988), cost-based supplier performance evaluation (Handfield and Pannesi, 1994), and cost-ratio method (NAPM, 1991), none of these approaches has received significant, widespread support in the literature or in practice (Soukup, 1987) for a variety of reasons. Some of the criticism of these methods includes complexity, situation-specific application, over-reliance on some factors and insufficient consideration of others and so on.…”

“…Several articles focus on the TCO approach in handling supplier selection/evaluation. For example, Handfield and Pannesi (1994) explore the underpinning of the TCO approach using the product life-cycle method. The authors note that costs are directly related to the life cycle stage of the product.…”

Does the Parallel Approach Make Sense in the Development of Discontinuous Innovations?

“…In many industries, the development of new technologies may be occurring at an alarming rate, with new suppliers appearing on the scene monthly or even weekly! High tech component life cycles in the introductory stage of the product's life cycle tend to be small and short lived, as the technology itself is unstable and changing (Handfield and Pannesi, 1994). Some components at this stage may not make it to general availability, or may even be pre-empted or aborted before they begin the life cycle.…”