Product Lifecycle Logistics
Supply chains have become more global and complex. This complexity adds time, touch points and costs, thereby eroding profit. Companies try to control these costs by optimizing discrete supply chain functions, such as packaging, transportation, warehousing and product repair. Although this tends to increase efficiency within specific areas, a lack of coordination across functions results in an inefficient supply chain overall.
To offset this, companies need to adopt a Product Lifecycle Logistics approach to managing their supply chains. Product Lifecycle Logistics centers around treating products as one inventory stream rather than separate streams of raw materials, finished goods, returned products, repairable products and liquidation products. But combining these functions can be difficult within corporations that have allowed their supply chains to become segmented, with different groups managing different phases of the product lifecycle in isolation.
Product Lifecycle Logistics encourages companies to follow the path of the product through the forward and reverse logistics supply chain, recognizing how events in one stage provide insight for better managing other stages. By tracking the activities and costs related to a product, from cradle to grave, companies have a much better idea of the total cost of product ownership and the impact of these costs on profit.
Benefits of Product Lifecycle Logistics
Companies that adopt a Product Lifecycle Logistics approach can reduce supply chain costs 10% to 20%. The key is breaking down barriers across today’s segmented supply chains. When they do this, companies become:
- Smarter. With a central view of supply chain data, companies can more easily manage and share information internally to make smarter, more-profitable decisions.
- Faster. Consolidating multiple functions, sometimes in the same facility, reduces the number of touch points, freight runs and, ultimately, cycle time.
- More agile. When a single third party logistics (3PL) provider manages multiple logistics services, one communication by the customer can trigger a series of immediate and combined actions throughout the supply chain.
- Greener. Product moves less when services are consolidated and synchronized. This results in less transportation and a smaller carbon footprint.
Applying Military Logistics Strategies to Consumer Products
The concept of Product Lifecycle Logistics originated in the military as a way to evaluate the total cost of purchasing and supporting weapons systems over their extended life.
Today, we have an opportunity to apply these same management principles to consumer products to drastically reduce supply chain costs.
For more information on Product Lifecycle Logistics, read our logistics white paper