Craig Zoberis, President of Fusion

6 Essential Steps To Define, Discover & Plan For Your Legacy Product

Learn how to define, discover and strategically plan for any existing legacy products on your assembly line to improve your profit potential.

As an original equipment manufacturer (OEM), addressing the issues of your legacy products is critical to protecting your hard-won profits.

How do you know when you’ve got a legacy product on your production line? How do you know when it’s time to categorically define a product as nearing obsolescence?

Legacy products hover in that vague production middle ground, between active products and retired ones that require no further resources. A legacy product is one that’s no longer under active promotion, but has yet to be fully retired. Legacy products are found in the decline stage of the product lifecycle, after they’ve grown, peaked and experienced their full maturity.

The following six points guide you through defining what a legacy product is and the steps you need to take to ensure you’re still reaping profits without dedicating too many valuable resources to this product.

  1. Product Sales Are On The Decline
    You know a product is nearing legacy status when there’s a consistent decline in sales over a significant period of time. When you start wishing you weren’t manufacturing that product anymore – and instead wish to focus your efforts and company resources on other important manufacturing areas – you’ve got a legacy product.
  2. Product Gross Margins Are Shrinking
    A product may be nearing the legacy phase when, even though sales haven’t taken a dramatic dip, the production costs increase every year. Spending more and more on manufacturing, labor, global resourcing and other resources shrinks the overall gross margin of your product, making it a classic legacy product.
  3. The Product Is Still Installed At End-User Facilities
    Even if you have a product that’s reaching the final stage of its product lifecycle, it may not be time to abandon it. When you have a legacy product that is still being used by key clients, it’s time to look for a cost-effective way to continue manufacturing the legacy product.
  4. People Prefer The Legacy Product Over New Products
    Although you might have a product showing significant signs of obsolescence, it may still generate strong interest from certain longstanding customers who prefer it to newer product versions. This product is still considered a legacy product, but one you should continue to manufacture through new, cost-saving strategies.
  5. The Product Absorbs Too Many Key Assets
    Key assets, such as floor space, capital equipment and personnel, are all valuable resources for your manufacturing facility. If you realize a product has entered the decline phase of the product lifecycle, this legacy product shouldn’t be taking up the same (or more) key assets as a current product that’s gaining in market share and profitability.
  6. Product Parts Are Obsolete Or Nearing Obsolescence
    Legacy products often require your team to re-engineer the product around an obsolete component satisfying customer demand (which may still be going strong). Or, a legacy product line might force your supply chain managers to search for a manufacturer of replacement parts. (This component obsolescence scenario is especially common with electronics.)

When it comes to any existing legacy products, you need to know when committing resources to perpetuity makes sense and when it’s better to put the product out to pasture.

Continuing to profit from your legacy products requires strategic action to extend their product lifecycle.