What does the term 'product life cycle' refer to in supply chain management?

The term 'product life cycle' in supply chain management refers to the stages a product goes through from its introduction to its decline. This concept typically encompasses four key stages: introduction, growth, maturity, and decline. Each stage has distinct characteristics in terms of market acceptance, sales volume, and profitability.

During the introduction stage, a product is launched, and efforts are focused on creating awareness among consumers. As the product gains traction, it enters the growth stage, where sales increase significantly, leading to higher profitability as economies of scale are realized. The maturity stage follows, where the product reaches peak market acceptance, and competition often intensifies. Finally, in the decline stage, sales decrease due to various factors such as market saturation or the introduction of new alternatives.

Understanding the product life cycle is crucial for supply chain management because it helps businesses make informed decisions about inventory levels, production schedules, marketing strategies, and resource allocation throughout the different stages of the product's life. This approach ensures that supply chain operations are aligned with market demand and product performance over time.