Product Portfolio Rationalization and Management in the Supply Chain

Products are of strategic significance to firm performance and long-term competitiveness. A successful product portfolio represents an optimized allocation of firm resources with maximized market share and revenues. The makeup of a product portfolio involves strategic planning of the organizational cross-functions including finance, operations, and marketing. Products typically go through a lifecycle – introduction, development, maturity, and decline. Throughout the lifecycle, products will be constantly evaluated by overall profitability level, sales, strategic alignment, risk tolerance, and customer satisfaction. Underperforming in any dimension may result in product adjustment, deletion, or replacement. Product portfolio rationalization derives from marketing management literature; few investigations have shed light on a holistic review of product deletion and rationalization in supply chains. Firms are no longer individual competing entities in the marketplace; products become the linkage that connects and interlocks firms on a supply chain network. Adding, altering, or deleting a product can bring significant changes to supply chains. These changes require collaborative efforts from actors across functions both inter- and intraorganizationally. This chapter provides a comprehensive review of product portfolio rationalization in core business management literature: finance, marketing, supply chain management, as well as sustainability. Research gaps and future research directions are discussed.