Integrating Product Life Cycle and Purchasing Strategies

INTRODUCTION Linkages, integration, synergy, competitive advantage, distinctive competence, and interdependence - if these words sound familiar, they should: They represent the strategic battle cry of management in the competitive environment of the 1990s. The literature continually reveals the need for integrating corporate, business, and functional strategies(1) to achieve a synergistic effect. To obtain synergy among the various levels of strategic planning calls for the alignment of efforts at all levels. The literature addressing the integration issue is, for the most part, conceptual and descriptive in nature. The focus of the literature has been in the strategy formulation area and on methods for achieving implementation. Many of the proposed implementation methods target the impact of organizational structure, communication channels, or planning issues. Still others indicate how to incorporate various organizational levels in the strategic planning framework. The frameworks are sound, but lack substance in offering specific direction or guidelines. There is an absence of frameworks that are prescriptive and proactive in scope. Models remain relatively descriptive due to the diversity inherent in each specific strategic situation. To develop a prescriptive, proactive model first requires the identification of a common strategic denominator that can be applied across a wide variety of strategic scenarios. This article presents the development of an integrated framework using the product life cycle (PLC) concept as the common denominator. The model will be referred to as the Integrated Product Life Cycle (IPLC) model. STATEMENT OF PURPOSE The purpose of this article is to present an integrative strategic model. The IPLC model uses the PLC as a "common strategic denominator," for connecting the various parts of the organization. The model offers one potential solution, to fill the need identified in the strategic literature for a link among the various strategic planning levels. Originally developed in the marketing area, the PLC concept is one that readily transfers to other disciplines. Founded on the notion that products pass through a life cycle much as humans do (i.e., birth, maturity, death), the PLC provides a structure to the life of products. This structure is what allows the PLC to facilitate the coordination of strategies among functions and levels. As products mature, buying patterns change and the responsibilities of marketers change. Likewise, other functional areas experience changes in responsibilities as products mature. One functional area directly affected by changes in buying patterns is purchasing. This relationship was originally identified by Berenson in 1967. (2) In a follow-up study reported in 1977, Fox and Rink(3) developed a list of purchasing operations using the PLC as a guideline for planning purposes. However, many of the strategies listed in that article are now thought to be outdated (e.g., maintaining several suppliers for each part). This study further examines the relationship between PLC and strategic planning for the purchasing function. The specific strategies incorporated in this research reflect contemporary purchasing strategies designed for the current competitive environment. A REVIEW OF THE PRODUCT LIFE CYCLE CONCEPT The PLC concept has its roots in the biological sciences. (4) Everyone is familiar with the stages of human development, or the "People Life Cycle" - birth, adolescence, middle age/maturity, and death. This process was adopted by marketing scholars as a method of explaining the evolution of a product. New products brought to the market followed a similar pattern of growth, plateau, and decline. Product life cycles were tracked and categorized by recording sales and profit levels. The PLC framework described in the literature typically contains four to six distinct stages. The labels associated with each stage vary from author to author, but the descriptions associated with the characteristics of each stage are similar. …