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Design costs out of products
Majority of a product's life cycle costs are determined by decisions made early in the life cycle of a product, at the design or development stage. Careful design of the product and manufacturing and other processes will keep cost to a minimum over the life cycle.
Majority of a product's life cycle costs are determined by decisions made early in the life cycle of a product, at the design or development stage. Careful design of the product and manufacturing and other processes will keep cost to a minimum over the life cycle.
Minimise the time to market
This is the time from the conception of the product to its launch. More products come onto the market nowadays and development times have been reduced over the years. Competitors watch each other very carefully to determine what types of product their rivals are developing. If an organisation is launching a new product it is vital to get it to the market place as soon as possible. This will give the product as long a period as possible without a rival in the market place and should mean increased market share in the long run. Furthermore, the life span may not proportionally lengthen if the product's launch is delayed and so sales may be permanently lost. It is not unusual for the product's overall profitability to fall by 25% if the launch is delayed by six months. This means that it is usually worthwhile incurring extra costs to keep the launch on schedule or to speed up the launch.
Minimise breakeven time (BET)
A short BET is very important in keeping an organisation liquid. The sooner the product is launched the quicker the research and development costs will be repaid, providing the organisation with funds to develop further products.
Maximise the length of the life span
Product life cycles are not predetermined; they are set by the actions of management and competitors. Once developed, some products lend themselves to a number of different uses; this is especially true of materials, such as plastic, PVC, nylon and other synthetic materials. The life cycle of the material is then a series of individual product curves nesting on top of each other as shown below.
By entering different national or regional markets one after another an organisation may be able to maximise revenue. This allows resources to be better applied, and sales in each market to be maximised. On the other hand, in today's fast moving world, an organisation could lose out to a competitor if it failed to establish an early presence in a particular market.
Minimise product proliferation
If products are updated or superseded too quickly, the life cycle is cut short and the product may just cover its R&D costs before its successor is launched.
Manage the product's cashflows
Hewlett-Packard developed a return map to manage the lifecycle of their products.You can see their approach.
Hewlett-Packard developed a return map to manage the lifecycle of their products.You can see their approach.
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