Shorter product life cycles set faster pace for many firms
''It's difficult to get a product out before it becomes obsolete.'' Richard Miller, marketing director for Applicon, one of the computer companies on Boston's ''technology highway,'' is talking about the fast pace of his industry - and others. New technologies and competitors are causing the company to develop products faster, and this has meant a shorter product life cycle for some of them. ''The products are still productive,'' he says, they just aren't always state of the art.
''You have to be quick on your feet to make the changes,'' Mr. Miller comments. ''You can no longer have months or years of research to determine whether a product will be good to (manufacture). By (that) time, the technology will be superseded.''
This situation will become more common among companies, especially those with a technological bent, says a recent study done by Battelle Laboratories. Companies apparently will not only have to contend with the fact that their products will become outdated faster and not last as long on the market, but also with the prospect that pressure to bring out new and better products will increase.
''This will be brought on by technologies that change at rapid paces but without dramatic breakthroughs,'' comments John Griffin, manager of applied economics at Battelle's Columbus, Ohio, division and the person who headed the study.
Mr. Griffin says the shorter product life cycle is most visible in the consumer market. One example is the quick boom and unexpected saturation of the video-game market. But it's also affecting industrial products, especially robotics, computers, and semiconductors, he says. ''In robotics, they are now adding various sensors, with very short periods of time in between.''
Another reason for this speedup, Mr. Griffin says, is that ''business's ability to analyze the marketplace is much better today than 10 years ago.'' Computers have brought more information about the marketplace to manufacturers, allowing them to make a quicker analysis of competitors and products.
Mr. Miller, the Applicon marketing director, believes the computer is behind the speedup. ''We can investigate alternatives, models, on the computer, so we can turn out products much, much quicker than before.''
Mr. Griffin says the shorter product life trickles down to almost every business except commodities, such as grains and ores. Russell Craig, an associate in the Boston office of the consulting firm McKinsey & Co., disagrees.
''It's very, very situational,'' Mr. Craig says. ''I'm not convinced it's the case overall. Some industries haven't changed in years - like tires.'' But, he says, ''The basic trend of new technology and things happening to compress (product) design . . . reduce the time to get new products through and out to market.''
Mr. Craig says it's possible for some companies to deal effectively with the constant flux. He theorizes it ought to be easier for semiconductor manufacturers to manage change ''because everyone knows what's coming in technology.'' The object is to make a chip with more memory, and it's a question of who can get there first, he says.
In the video-game industry, on the other hand, the object is apparently less clear. Manufacturers are dealing with a lot of unknowns - including a consumer market that's not sure it knows what it wants.
''(Video game) companies are incorporating new technologies at a rapid rate, trying to get the segment of the market that is feature sensitive,'' Craig explains. ''And (companies) are cutting prices rapidly to extend the price-sensitive part of the market and make it bigger.'' That brings on ''a rapid obsolescence of products.''
A faster product pace means change for everyone in the business chain - from supplier, to manufacturer, to retailer, to customer.
For suppliers and manufacturers, it means ''keeping far less inventory on hand at all stages of the production process,'' Griffin says, because companies can't afford to be stuck with inventory that doesn't apply to new products. Flexible manufacturing - computer-controlled manufacturing that gives factory machines the ability to switch rapidly from one kind of product to another - will become more common. Applicon, which makes computers used in flexible manufacturing, forecasts a 50 to 60 percent sales growth this year.
For retailers, it means being able to predict product life cycles with more accuracy. Herbert Kline, president of Markline Inc., a Waltham, Mass., firm that sold some $18 million worth of consumer electronics through two stores and a catalog last year, talks gratefully about a computer software program that gives Markline the power to project orders fairly accurately.
''We can analyze early returns from catalog orders almost like election results,'' Mr. Kline says. ''Within two weeks after the catalog hits, we know what our needs will be throughout the fall season. If we didn't have that, we'd be like most other retailers, hoping on a wing and a prayer.''
And customers don't want to be left behind either. They ''are looking for a commitment from a company to provide product upgradability,'' comments James Bast, president of Dictaphone Corporation, an office-products subsidiary of Pitney-Bowes. That means making new products that can use the software run on old ones, and it means keeping operating procedures for products consistent, he says.
Dictaphone customers like the trade-in and leasing arrangements that allow them to take advantage of the company's new products and features, Mr. Bast says. But the company needs to stay on its toes. Customers, especially large companies, ''are becoming much more knowledgeable'' about the alternatives on the market, he says.