Academic journal article International Review of Management and Business Research

Risk Management in Early Product Lifecycle Phases

Academic journal article International Review of Management and Business Research

Risk Management in Early Product Lifecycle Phases

Article excerpt

(ProQuest: ... denotes formulae omitted.)

Introduction

Currently, risk management is an integral part of most of state-of-art production enterprises because running of enterprises usually goes with various kinds of risks. Therefore, it is necessary to develop and improve ways of implementation of a risk management system into enterprise processes. Risks are supposed to be managed across all levels of organization and considered in terms of finance, environment and occupational safety (Stark, 2011; McRoberts, 2005). As far as production enterprises are concerned, it is also necessary to apply risk management to produced products. Every product has its product lifecycle where it is needful to consider various influences which enter the product lifecycle and manage risks here (Bergejo, 2009; Ying-Kuiet al., 2004). The product lifecycle and its managing have become a present standard and a part of the information structure of modern enterprises. Due to comprehensibility and definiteness, it consists of several phases. This helps to make risk management easier because it is feasible to manage risks for each phase separately. The issue of underdeveloped method for proper risk management of product lifecycle was touched by Zou and Lin-li (2010). This study deals with the phases of conceive and design that are considered to be the early phases of a product lifecycle. Managing risks at the beginning of a product lifecycle is very important because this action may be beneficial in the future phases and save a considerable amount of money, company's reputation or even human health.

Product Lifecycle Management

The product lifecycle is based on the principle of a biological cycle, i.e. the process from birth to death. This theory is the same for a product and it can also be understood as a process which is one of the other enterprise processes. In risk management, all participating subjects must understand the relationship between project management processes and the other enterprise processes. The product lifecycle is the natural framework for investigation of relationships and processes in the field of product management. It is described as a means of defining of the beginning and end of a product and its phases. The form of lifecycle definitions varies by industry areas but it is also various within the same industry for different organizations and businesses. In product lifecycle management, the risk approach changes in various stages. This depends on how much information is available and what extent of the project progress is. The typical product lifecycle description covering all phases is shown in Figure 1.

The product lifecycle or PLM (Product Lifecycle Management) is a control process from conception through design and production to service and disposal. PLM includes people, data, processes, business systems and provides the main information flow for companies. Simultaneously, PLM systems help organizations in complying with increasing complexity and engineering tasks of new products development for global competitive markets (Guo & Zeng, 2010; Immonen & Saaksvuori, 2008).

Low-quality data in the process of a product origin means a considerable problem of higher costs (Wu et al., 2011; Porter & Rayner, 1992; Snieska et al., 2013; Dahlgaard et al, 1992; Modarress & Ansari, 1987, March, 1989). Number of components of all today's products and its shape complexity are still increasing. This trend is clearly seen in all industries. It is not an exception when the number of product components is not just in the tens of thousands but hundreds of thousands or even in six figures (automotive, marine, aviation and aerospace industry) (Gecevska & Stojanova, 2013; Comford et al., 2006). Therefore, it is necessary to prevent the risk of failures from the very beginning of the lifecycle of each product. The level of ease of changes in single phases is shown in Figure 2.

Risk Management

Proper risk management process focuses on the identification and treatment of risks. …

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