The Bathtub Model - Optimising inventory with precision

In today’s fast-paced business environment, staying competitive requires innovative approaches to managing risks and inventory. One such approach is the bathtub model—a simple yet powerful framework that can revolutionise how organisations approach product lifecycles.

This blog unpacks the bathtub model, explains how it works, and shares actionable strategies with real-world examples and data. Whether you’re in retail, manufacturing, or technology, this concept can help you optimise operations and achieve sustainable growth.

What Is the Bathtub Model?

The bathtub model gets its name from the shape of its curve, which resembles a bathtub. It highlights how product failure rates change over time and is divided into three phases:

1. Infant Mortality Phase (Early Failures): Products experience a high failure rate shortly after launch due to design flaws, manufacturing defects, or improper use.
2. Normal Life Phase (Stable Operation): Failure rates stabilise during this period as products perform reliably. This phase often represents the peak of the product’s lifecycle.
3. Wear-Out Phase (Late Failures): As products age, failure rates rise again due to wear, tear, and obsolescence.

The bathtub model is more than just a theory—it’s a strategic tool that organisations can use to minimise risks, manage inventory, and boost customer satisfaction.

Why the Bathtub Model Matters for Organisations

The insights from the bathtub model allow organisations to:

1. Reduce Costs by optimising inventory based on lifecycle stages, companies avoid overstocking or understocking.
2. Improve Reliability by proactively addressing early and late-phase risks ensures product quality and longevity.
3. Enhance Customer Experience by minimising failures builds trust and loyalty.

Using the Bathtub Model for Strategic Inventory Planning

Organizations can implement the bathtub model in the following ways:

1. Forecast Demand Based on Lifecycle - Adjust inventory to reflect demand trends during each lifecycle stage. Studies show that inventory holding costs, typically comprising storage, depreciation, insurance, and opportunity costs, can consume 20–30% of a company’s inventory value. Using lifecycle-based planning tools like the Bathtub Model helps businesses reduce these costs by streamlining inventory replenishment and eliminating obsolescent stock. [Source]
2. Proactively Mitigate Risks - Conduct rigorous testing and quality checks during the early phase to prevent defects. Effective inventory management, including better demand forecasting and lifecycle analysis, minimizes stockouts. This aligns with lean inventory principles and improves customer satisfaction while reducing operational disruptions, and lowering stockout rates by up to 20%. [Source]
3. Optimize Maintenance Schedules - Plan preventive maintenance for equipment or products in the wear-out phase. Predictive maintenance reduces repair costs by an average of 25%. Companies that actively reduce holding costs and improve inventory efficiency report an increase in working capital availability. This is because less capital is tied up in unused inventory, which enhances liquidity for strategic investments. [Source]
4. Reduce Obsolescence and Waste - During the wear-out phase, avoid overstocking by introducing trade-in programs or EOL discounts. Organizations that adopt proactive inventory management for EOL products, such as trade-in programs or targeted sales discounts, report significant cost savings. These measures prevent excess stock from becoming obsolete and reduce waste by up to 50%. [Source]

How You Can Leverage the Bathtub Model

Whether you’re managing inventory, designing new products, or addressing supply chain risks, the bathtub model provides a clear roadmap for decision-making. Here’s how you can start using it:

• Adopt Lifecycle Thinking: Segment your products based on lifecycle phases to better predict demand and manage stock.
• Focus on Quality: Reduce early failures through robust testing and supplier collaboration.
• Invest in Data Analytics: Use real-time insights to track product performance and plan preventive measures.

Example: Toyota – Leveraging the Bathtub Model for Reliability and Efficiency

Toyota, one of the world’s leading automotive manufacturers, is a prime example of a company that applies the principles of the bathtub model to optimize inventory management, improve product reliability, and enhance customer satisfaction.

How Toyota Uses the Bathtub Model

By applying the bathtub model, Toyota not only minimised risks but also turned challenges into opportunities. Their strategic approach across all phases of the product lifecycle showcases the model’s potential for driving efficiency, reducing costs, and maintaining customer trust.

The bathtub model is more than a curve; it’s a strategy for driving efficiency, reducing costs, and delivering value to customers. By understanding the unique risks and opportunities in each phase of a product’s lifecycle, organisations can unlock new levels of success.

As businesses strive to stay ahead, tools like the bathtub model remind us that the key to growth lies in balancing innovation with practicality.