By Erik Bjernulf
– Planning for the Product life cycle. Which is most important: Phase-in or Phase-out of products?
What a strange question! Certainly the introduction of new products to the market would be much more important than withdrawal?
Nine times out of ten I would fully agree – planning for successful product launches is a key responsibility for any ambitious product manager. But, when doing assessments on how companies are managing product portfolios, we surprisingly often see a lack of a formal or even well-orchestrated process of planning and reducing old obsolete offerings.
Phase-out is both about deciding WHICH product to withdraw – and to handle it in a proper way!
Imagine what happens if you never ever withdraw products from the market. You’ll add new complexity with every addition to the portfolio. (For a software system product – you could treat individual modules or even features in a similar way!)
- R&D will be bogged down with endless maintenance efforts.
- Supply chains will be clogged with numerous low volume products.
- Sales will be confused with overlapping options to sell to every single customer.
- A regular portfolio review is a necessity to keep momentum in innovation and for renewal of your market position.
Portfolio planning is a whole field of expertise in itself – I will not linger on that one now – but you’ll find more information here: 5 steps for successful Portfolio management white paper
The Phase-out process
Once you have decided which products to withdraw it’s time to plan for execution.
- The planning phase The withdrawal of a product could potentially be a major issue for one particular customer, a critical supply partner – or that special sales manager in California. As often – good planning is the basis for success! What is the strategic background for the phase-out decision? Do you expect the product to be replaced by a new modern version? Maybe customers would need support to be able to migrate from the old to the new one. In particular for software and systems products there would be interfaced and integration with other systems to consider. Do you have binding sales agreements with key (or any!) customers? What is your obligation to fulfill forecasts you have given to the supply chain?
- Phase Out
Depending on product, market and agreements – the actual phase-out phase can cover a long period. You need to distribute pre-notifications on a future EOL (End-of-Life) – typically a year in advance. Product managers would have to interact with most parts of the company – and also the entire Ecosystem. Sales: Make sure there is a clear message on e.g. A replacement product Marketing, Marketing: Withdrawal of marketing material from websites, product catalogues R&D: Making sure no more effort is spent on maintenance, final document to be a Manufacturing stored: Handling product specific tooling, components and inventory ERP, and Sales systems: Setting appropriate product status codesControlling: Decide on handling of cost for obsolescenceSupport: Training in migration support
- Follow-up After most R&D and launch projects companies are doing a retrospective – or a lesson learned activity. It would be a natural thing to plan for also after product withdrawals – wouldn’t it? Maybe after 1 month, half a year of even a longer period – depending on the lifetime of products in your area. You’ll want to cover hands-on issues such as: did we handle all remaining inventory, are products withdrawn from websites at channel partners etc. But also the business results – what happened to sales of other products, are the customers, suppliers and sales partners happy!? Phase-out is a critical production process often poorly treated by product managers. Regular planning of the portfolio and controlled phase-out of less attractive offerings are critical for long term sustainability.