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Happy’s Essential Skills: Project/Product Life Cycle

The product, and or project (process) life cycle (PLC) is fundamental to a corporation intent on developing new products or processes. It sometimes is called the new product introduction (NPI) process but that is only half of the life cycle. There is product support, enhancement and eventually, obsolescence.

I was introduced early to the phases of the PLC process, because our group supplied all the prototype printed circuits. My first really large PLC was the HP-35 handheld scientific calculator in 1971. I would practice the PLC on this and subsequent calculators for the next 20 years. Many considered this battery-powered marvel to be the beginning of the portable appliance age. Up to then, the only portable computing devices were the slide ruler and the abacus (not too many people had the mechanical Certa).

The PLC process consists of the all the work involved in developing, prototyping, manufacturing, enhancing, supporting and obsoleting a product as an organization’s new product for a market-place. There are generally four to six phases: concept design; physical design; prototype manufacture; pre-production and volume ramp. After this, the product will be handed over to full production, and the organization may also have some involvement in after-sales.

Phase 0—Concept & Integrated Planning

A concept is a description of the features, form and function of a product and is usually accompanied by a set of requirements, analysis of competitive products and economic justification of the project^[1].

Determination of Customer Requirements: This will be interlaced with the marketing functions that will establish whether the market exists, collect customer needs and identify lead users. Working with R&D, the project team develops a product-specific set of requirements.

The product team develops the following:

• A clear definition of the target market segment and market requirements
• An understanding of competitors’ activities and their potential effect on the proposed product
• Assesses leverage opportunities that will enhance the development effort
• Identifies preliminary resources and investment needs
• Determines potential development interdependencies
• Defines a Phase 1 study plan and a product requirement document (PRD)

Phase 1—Study & Define Objectives

The functional areas respond to the PRD with a proposed product definition that satisfies customer/user needs and time-to-market constraints.  The product team will develop initial product functional specifications including resources, schedules, testing strategies and external dependencies.

Product Design Specification: The development team will identify and benchmark competitive products and provide functional requirements and technical specifications^[2]. Plans for product options and extended product families will be developed. The product manager identifies and resolves differences between the Product Specification and the requirements stated in the PRC^[3].

Design analysis: Initially, concept development and technology assessment will take place considering product platform and architecture. Alternative concepts will be investigated and experimental prototypes built and tested. Selection of the best will take place.

Phase 2—Specifications & Physical Design

Each functional entity creates a design to meet the Phase 1 functional specifications. The design is complete and detailed enough that the developing entities can make a relatively accurate assessment of and commitment to FURPS+ (functionality, usability, reliability, performance, supportability, and other factors), cost, schedule, function, and performance.

Design realization: Schematics and product layout drawings will be generated and simulations of the design will be carried out for product function, cost, schedule, environment and any qualification to recommended regional or global safety or design standards.

Component procurement and supplier negotiations: Marketing commits to a revenue and unit forecast.  Unit quantities would be known for bargaining power with component suppliers and designs would have to be assessed with contractors’ process capabilities.

Test strategy and process development: Manufacturing simulations would ensure the process compatibility of the manufacturing functions, both in-house and contract. Test engineers would ensure testability of the design during production.

Phase 3—Develop, Prototype & Test

Verification of design and process information: Prototypes should be built as close as possible to the full-scale assembly using the intended components and processes and to the product specification. Tooling and specialized process equipment would be designed and tested.  All other functional entities (marketing, quality, manufacturing, and support) begin implementing their respective plans.

Conformance Test and Customer Acceptance/Demonstration Products: Beta prototypes would be tested internally and used for demonstration purposes or for customer conformance and  .Documentation, support services, and marketing literature is prepared, as well as localization and legal requirements. Tests verify the completeness of the total solution and ensure that what has been developed matches FURPS+ objectives and adheres to product specification.

Phase 4—Process Verification and Volume Ramp

Volume manufacturing qualification:Focus is on testing the product and all supporting materials in a customer environment, and demonstrating that the product can be supported in the field. This is important for product quality and process refinement. Any final engineering changes should be actioned before large-scale manufacture and manufacturing can demonstrate the ability to build and ship in volume. Also, the work force can be trained to use any new production processes, machines or tooling and customer support can sign off on the field’s ability to support the product.

Evolution of manufacturing efficiencies and yields: The first process results are gathered for yield improvement studies, etc.

Market and supply chain development: Market push can continue with products visible at trade fairs, customer visits, etc. Regular order quantities can be placed and suppliers tested for delivery times and quantities.

Phase 5—Volume Shipment, Enhancement and Support

Product is supported by Manufacturing and Field Sales: Phase 5 enhancement is a feature or function that significantly enhances an existing product and requires tracking through an abbreviated product phase review. It is a major product addition, but not a new product requiring a new part/product number. Finance measures and reviews the actual return on investment in the product and compares the measurement to original product goals. Maturity requirements are developed and discontinuance process is initiated at the exit of Phase 5.

Issues to consider are:

• distribution and field service
• spares and repair
• take-back, disassembly, recovery, re-use, refurbishment and disposal

Phase 6—Maturity

Responsible Organizations Plan for Discontinuance: Discontinuance planning takes into consideration customer satisfaction, the migration of customer applications, and parroting of third party products. These issues require critical consideration in future product planning.

Issues to consider are:

• Product demise
• Disassembly and disposal
• Migration or discontinuance plans

This entire PLC can be seen in Figure 1. (A higher resolution figure is available from the column download.) The PPR process is part of the larger enterprise-wide business planning process (Table 1).

Table 1: Relationship between the product phase review and the business planning process with key team goals.

Figure 1: The product life cycle with linkages, major activities and checkpoints/milestones.

Requirements and Benefits of an Efficient PLC Process

It is particularly useful to consider the electronics industry because it has been under considerable pressure recently. The sales life of electronic products has decreased, prices have fallen and expectations of quality and functionality have risen. Since the 1970s, Western manufacturing in general has seen aggressive competition from traditionally subdued Far Eastern-based companies—first Japan, then Taiwan and Korea, and now China. Communication technology has improved, with email and the internet, to the point that competition that was once local is now global. Here, we will explore these pressures on the electronics industry and the effect on profits. Once we understand the reasons, we can address them.

Most companies realize the importance of an efficient PLC process to develop products and get those products to the customer as quickly as possible. In the electronics industry it can mean the difference between success and failure or in extreme circumstances survival and closure. From a list of PLC efficiencies, we can determine a requirements list for a PLC process to maximize profits.

Pressure on the Electronics Industry

Figure 2 shows the change in profit making period for various industries during the 1990s and the particular pressure on the electronics industry.

Figure 2: The change in pay-off and product life span over the 1990s.

The product life-cycle span (PLS) is the upper line and is the length of time the product will remain on the market. The pay-off period is the lower line and is the time for the product profits to pay-off the development costs. The grey area represents clear profit. For the electronics industry the pay-off period has risen by on average 5.5% but the PLS has fallen by 46%. This has the effect of squeezing the time the products have to make profits. The time it takes profits to pay for all the development costs is an important metric called the break-even time (BET)^[4]. Also, notice that the electronics industries represent the narrowest part of the graph. This means that, although other industries’ profits are being squeezed as well, there is particular pressure on the electronics industry.

Increasing Profits During the PLC Process

A reduction in potential profits gained requires solutions. Figure 3 is a typical product’s sales and profit cycles. The sales cycle shows no sales while the product is being developed, increase in sales on introduction to a market, steady growth of sales to a constant level during product maturity and the drop in sales during decline.

Figure 3: Profit and sales cycles for a typical product’s introduction, maturity and decline.

We can divide the diagram into three areas:

1. Product development: There are no sales therefore the profit is negative.
2. Product introduction to the market and growth: Profits increase sharply as sales rise.
3. Maturity and decline: sales steady and eventually decline and the profits steadily decline throughout.

Looking at Profits During the PLC Process

There are three issues to consider here:

Issue 1

The first issue is the initial loss during the developmental or PLC stage (including product design, prototype manufacturing and ramp to volume production-Figure 4).

As there are no sales of the product then the development costs provide a negative profit. To increase the clear profit made by the product further downstream, we can:

1. Reduce the costs during the development stage (the depth of the dip). Smaller development costs will mean a faster return on investment (ROI); once the product’s sales pay off the ROI, then the product will make real profit.
2. Reduce the development time. The shorter the development time, the sooner the product is introduced and the sooner it starts to generate returns (Figure 5).

Figure 4: The profit and sales cycles for a typical product’s introduction, maturity and decline, highlighting the development phase.

Figure 5: The benefits of early introduction of a product to market.

Figure 5 is a graph showing the effects of introducing a product early, by shortening the development time. These effects are:

1. Extension of product sales life: Products introduced earlier seldom become obsolete later. Consequently, each month saved from the development cycle implies an extension to the sales period.
2. Increased market share: The first product to the market has a 100% market share until competition catches up and releases its own. In some markets such as software and machine tools, once a system is purchased the buyer is virtually locked into the product type due to the high premium required to change.
3. Higher profit margins: With no other competitor, a company can enjoy pricing freedom and higher margins. The price may decrease later as competitor’s products enter the market.

In contrast, Figure 5 also shows the effect of a late product introduction. The lower line shows the reduction in sales due to competition already selling similar products, and a reduction in sales life because irrespective of when a product was introduced it is likely to start to decline in sales at the same point.

Development time and cost reduction can be achieved by using tools like concurrent engineering, DfM, and value analysis during the design phases, and Lean manufacturing and TQM during prototype manufacturing^[5].

Issue 2

The second issue is the huge swing to a high profit on introduction of the product. The company would like to make this as high as possible and as steep as possible (Figure 6).

Figure 6: The profit and sales cycles for a typical product’s introduction, maturity and decline, highlighting the introduction and growth phases.

A higher graph suggests larger profits and a steeper graph will increase the length of time the product stays at a premium market price before decline in profits occur. There are two ways to do this:

1. Early, or if possible, first entry into the market. Again, a fast development process is required, and this aspect is described above.
2. Good promotional activity of the right product. An awareness of the market and its customers is required to highlight potential market sectors for product launching. This information would be provided by marketing functions, but the development team is responsible for:

• Ensuring the product only satisfies the requirements of the customer. Development time and cost can easily be wasted on adding unnecessary functions to a product.
• Ensuring the developed product is of the best quality. This is a powerful product differentiator that improves a company’s reputation, sales margins, price potential and product sales life. A poor quality product can have a disastrous effect.

These both add up to ‘total customer satisfaction.’ Tools such as QFD would be useful here—this will be described in later columns.

Issue 3

The third is the slow decline in profit as the product matures and declines (Figure 7).

This is inevitable, as the price will reduce to sustain sales when the competition increases and undercuts your own prices. Reducing the manufacturing costs would maximize the profits at this stage and allow sales functions flexibility when promoting the product. Tools such as Lean Manufacturing would be helpful here^[6]. 

Figure 7: The profit and sales cycles for a typical product’s introduction, maturity and decline, highlighting the maturity and decline phases.

Requirements List for the PLC Process

We can now derive a list of requirements for an organization’s PLC process.

1. Develop the Right Product: We must first make sure we understand the market we are introducing our products to. The marketing functions must make sure it is the right market and provide added value if we are competing with other similar products. The development team must provide correct functional specifications with any options offered to ensure the development energy is focused on the right product. They must benchmark against competitor’s products if available.

2. Fast development process: Once we know what the product is supposed to do we must develop that product as quickly and cheaply as possible.

3. Cost-effective manufacturing process: If the product is cheaper to manufacture than the competitors’ products, there will be greater profit margins, a faster ROI, and more scope for sales functions to undercut competitors.

4. Quality products on time, every time: The aim is to provide total customer satisfaction.

For PLC to work cost-effectively, we need to use appropriate tools to increase the efficiency. What some of these tools are, and the areas where they can be applied in relation to the flow chart (Figure 8), is the subject of new product introduction tools, to be discussed in future columns. Stay tuned!                                                       

Figure 8: Flow chart of a typical product development process.

References

1. To be covered in column #21, the “10-Step Business Plan.”

2. Functional specifications will be covered in Column #16, “QFD.” (September). 

3. Benchmarking will be covered in more detail in Column #13 (August 2016). 

4. Break-even time will be covered in Column #14, “ROI-BET.”

5. DfM will be covered in more detail in Column #10, “DFM/A.”

6. Lean Manufacturing will be covered in Column #23.

Happy Holden has worked in printed circuit technology since 1970 with Hewlett-Packard, NanYa/Westwood, Merix, Foxconn and Gentex. Currently, he is the co-editor, with Clyde Coombs, of the Printed Circuit Handbook, 7th Ed. To contact Holden, click here.