Product Phasing Out
Product phasing out is the process where a product is gradually withdrawn from production and sales. The purpose is to optimize the product portfolio, reduce capital tied up in inventory, and make room for new products.
What does it mean to phase out a product?
Phasing out a product involves planning how a product is withdrawn from the market and the supply chain. This can include decisions about stopping production, selling off remaining inventory, and communicating with customers and suppliers.
Why are products phased out?
Phasing out is used to reduce costs associated with slow-moving or obsolete products, free up capital tied up in inventory, and ensure that resources can be used on products with higher value.
When is a product phased out?
Phasing out is typically used when:
- The product has low demand or falling revenue
- Production costs exceed revenue
- New products or updated versions are to be introduced
- Inventory is to be optimized and it is necessary to free up capital