Lifecycles Are The Foundation

It’s all active product! Wahoo we will sell it forever!!

Until it isn’t and you don’t.

Then what do you do when your sales on certain SKUs are progressively declining even while the rest of your business is rapidly growing? What do you do when it’s apparent the lifecycle of that SKU is coming to end and you still have a ton of inventory on hand?

Discount? Off-Market Sales? Promos? Donate? DISPOSE?

Lifecycles are the foundation of a successful and responsible supply chain. It’s fairly easy to overlook this very critical classification when first building a business and expanding your product offering. Of course we want every SKU to be a forever SKU- but inevitably not all will be and planning in advance what lifecycles look like in your business will drastically alter the way you set up your supply chain.

Typically, there are 4 lifecycle types across most businesses- New, Active/Core, Phase-Out and Discontinued/Obsolete. These terms have different nuances depending on the business but essentially fall into the below buckets:

New: New SKU to your current assortment, in development or just launched, unknown volume (with expectations/targets set)

Active/Core: Existing for at least one year/selling season in your assortment, history of sales, ability to project future sales

Phase-Out: Existed for 1+ years/selling season, sales are clearly declining regardless of efforts to increase, sales make up continually less of overall total

Discontinued/Obsolete: Officially not in active assortment, ideally 0 inventory on hand, sales now (if any at all) are through off market channels

Each of the 4 lifecycles has its own patterns and requirements pertaining to supply chain which we will discuss in a later post. Most importantly, all of your SKUs currently fall in one of the 4 buckets and many will move into the latter two at some point. The goal here is to not be surprised but rather prepared and strategic at each phase… and responsible by planning for each phase in advance.