Product Line Management (PLM) is a strategic approach to managing a group of related products as a portfolio throughout their life cycles.
The success of revitalising a portfolio lies within recognizing its weakness.
Modifying an existing portfolio often evokes significant fear and resistance. Long-term customers may resist changes, and there may be a reluctance to acknowledge that a previously chosen direction did not achieve the desired results.
Product Line Management entails the coordination of various functions within an organization to ensure that the product line meets market demands, achieves business goals, and maintains a competitive edge.
A critical component of this process is the measurement of performance and continuous optimization. However, organizations often neglect to set the appropriate Key Performance Indicators (KPIs). Even when KPIs are established, their outcomes may be questioned or doubted.
Ensuring the right KPIs are in place and trusted is essential for effective Product Line Management and achieving sustained success.
To achieve a sustainable growth portfolio, it is essential to take a step back and address current issues. Many organizations focus solely on looking forward and adding new products, failing to learn from past mistakes.
Addressing the existing portfolio does not necessarily take precedence over meeting market demands; in most cases, these efforts go hand-in-hand. A balanced approach that includes both portfolio optimization and market adaptation is key to long-term success.
Products today are not solely physical devices; a significant portion of development, approximately 85%, comprises software. This software is either embedded within the devices or hosted in the cloud, enhancing functionality and connectivity.
1. 2%-rule: any product within the portfolio that has contributed less than 2% of revenue over the past six months, and is not classified as an accessory, should be considered for end-of-life..
In the early years of my career, I received training in Product Line Management within the Bell Labs organization. They provided me with two fundamental and easy-to-apply “rules” that have guided my approach ever since.
2. Fat-rabbits: each product has a top three list of the most expensive components. When (cost) optimizing, the focus are on them.
