Whether you face stockouts or overstocking, whether price promotions become necessary, or how well supply chain partners coordinate, depends far more on the stage your product is in than on the technology you use.
There are five distinct stages in the product lifecycle: introduction, growth, maturity, decline and exit. Different authors offer different strategies for each. Fisher talks about innovative versus functional products and the matching choice between responsive and efficient supply chains. Van Hoek focuses on postponement. Even recent cases, such as how Amazon has evolved its fulfilment centres, show the same underlying logic playing out across these stages.
According to Fisher, innovative products typically sit in the introduction stage. Functional products sit in maturity. That distinction drives very different supply chain decisions.
For innovative products, demand is uncertain. The critical choices about inventory and capacity are not about minimising cost. They are about where in the chain to position inventory and production capacity so you can hedge against that uncertainty. Suppliers should be chosen for speed and flexibility, not for the lowest price.
For functional products, demand is more stable. The important flow of information is the one that moves inside the chain as suppliers, manufacturers and retailers coordinate to meet predictable demand at the lowest cost. Continuous replenishment becomes essential.
The split between innovative and functional is not absolute. It also depends on the mix: how much of your portfolio is truly innovative versus functional. That mix should shape the overall design of the supply chain. Fisher also notes that products can shift from functional to innovative or the other way around. When that happens, the usual reactions, such as cutting inventory, pushing the sales team harder, or forcing Just-In-Time, are often the wrong moves. You need to reclassify the product and adjust the supply chain to match.
The most common mismatch, he says, occurs when companies put an innovative product into an efficient supply chain (or a functional product into a responsive one). The correction is to move the product into the right quadrant: innovative products need responsive supply chains; functional products need efficient ones.
Fisher's thinking does not stop at matching product type to supply chain. In a later HBR piece with Ramnath Vaidyanathan, he asks a more practical question: which products should you actually stock? Simply dropping low-selling items that are in decline is often a mistake, because those products may still matter to certain customers. Instead, he suggests using the attributes of existing products to predict demand for both new (introduction-stage) and declining items. For a television, attributes might include screen size, resolution, price, LCD versus plasma, and brand. This approach works better for relatively stable “hard” products than for items that change constantly. The key is to analyse sales and forecasts across the product mix by attribute, and then assort products according to what matters most in each locality.
Taken together, the message is straightforward. The lifecycle stage of the product sets the real constraints and opportunities for the supply chain. Get the stage right, match the supply chain type to it, and keep adjusting as the product moves, and many of the usual inventory and coordination problems become much easier to manage.