This chapter presents the findings from the literature review. At first an introduction is given followed by a description of the findings. Finally, a table is presented, summarizing the findings.
As explained in the research design chapter, two systematic literature reviews have been conducted in order to identify decisions to consider when planning for a product rollover in the production. Hence, the result of this literature review contributes to answer the first research question. The difference between the two reviews is the perspective. The first review is from a product rollover perspective while the second is from a NPD perspective.
The literature reviews culminated in a number of decisions, which were grouped into four categories to provide a clear overview of the identified decisions. The decision categories include:
Category 1: Volume
In the Volume category, three critical decisions have been found in the literature review:
Decide how much to produce of the new product during the product introductionDecide how much to produce of the old product up to the elimination datDecide the required production capacityDecide how many spare parts to produce
The first decision found in the literature review in the Volume category is Decide how much to produce of the new product during the product introduction (Abernathy and Baloff, 1973; Carrillo and Franza, 2006; Özer and Uncu, 2013; Shen et al., 2014). Before introducing a new product at the market it is crucial to match production volume with demand forecasts. This, in turn requires cross-functional planning and jointly developed production and marketing plans. The volume will fluctuate during the product introduction in order to align with a determined production start-up pattern. Incompatibly developed plans may result in undesired consequences. In the case where demand exceeds supply, consequences such as opportunity costs, direct expenses and order cancellations can occur. In the contrary case, there is a financial risk tying up assets, and excess inventory may lead to obsolete products because of modifications or lost sales.
The second decision found in the literature review in the Volume category is Decide how much to produce of the old product up to the elimination date (Avlonitis, 1983). Avlonitis (1983) developed a framework for the implementation of product elimination. When the decision is taken to eliminate a product, the marketing program up to elimination date is determined. It is decided what volume of the old product that needs to be produced in order to satisfy residual demand, including backlogs, completion of contracts and expected demand up to elimination date. Matching the production volume with the residual demand is vital to avoid leftover inventory of finished products.
The third decision found in the literature review in the Volume category is Decide how many spare parts to produce (Avlonitis, 1983; Kim and Park, 2008). Before eliminating a product it is crucial to decide how many spare parts to produce to satisfy future requirements. The amount of required spare parts depends on the set warranty period and agreements on availability of spare parts.
Category 2: Capacity
In the Capacity category, one critical decision has been found in the literature review: The decision found in the literature review in the Capacity category is Decide the required production capacity (Carrillo and Franza, 2006; Bilginer and Erhun, 2010; Li et al., 2014). Prior to the start of production of a new product replacing another, decisions regarding necessary production capacity needs to be considered. At a product rollover, the demand for the old product ramps down, while the demand for the new product ramps up. Thus, capacity planning needs to be managed according to this pattern. Planning for the optimal capacity entails trade-offs to be considered. Setting the capacity too high will imply costs for idle capacity, while setting the capacity too low forces the company to build up inventory before product introduction or end up with backorders. The capacity also needs to be distributed accurately between the old and new product. A factor with high impact to take into account when planning for the capacity during a product rollover is whether the old and new product will be produced with the same manufacturing equipment. In that case the production capacity will be restricted during the product rollover. Using separate manufacturing equipment allows more flexible capacity
Category 3: Timing
In the Timing category, five critical decisions have been found in the literature review:
Decide what rollover strategy to use (solo or dual)
Decide when to launch the new product at the market
Decide when to eliminate the old product at the market
Decide when to start the production ramp-up
Decide when to end the product elimination
The first decision found in the literature review in the Timing category is Decide what rollover strategy to use (solo or dual) (Saunders and Jobber, 1994; Billington et al., 1998; Lim and Tang, 2006; Koca et al., 2010; Liang et al., 2011; Liang et al., 2014). It is of major importance to consider launch and elimination timing in relation to each other. That means, deciding whether to apply solo or dual product rollover at the market. If carried out successfully, a solo rollover implies lower rollover cost than a dual rollover. However, the downside is that a solo rollover infers higher risks, and is therefore to prefer when the demand is stable. The risks of solo rollover are for example, excess of inventory of the old product, that the old product is out of stock or that there is a delivery delay of the new product. While dual rollover brings other risks, such as cannibalization, inferring that the old product takes over the demand for the new product. Another possible scenario is that customers delay their purchase of the old product in favor to buy it at reduced price.
1.3 AIM AND RESEARCH QUESTIONS
Category 4: Inventory
5.1 RESEARCH QUESTION
5.2 RESEARCH QUESTION
GET THE COMPLETE PROJECT
Planning a product rollover