Sku rationalization software

Now, as efficiency, sustainability, and cost optimization continue to be top priorities among organization leaders, companies are turning to SKU rationalization to help companies better control product portfolios and improve their bottom line. In the past, SKU proliferation was the answer to ever changing consumer demands, market shifts, and globalization.

For example, the average grocery store in carried about 7, SKUs compared to a modern-day market which typically has over 40, SKUs. A lack of SKU management tools and processes has made it difficult for companies to manage their growing number of SKUs in a profitable way, which has led executives to search for alternative ways to drive growth and cost savings. Now, many companies are turning to SKU rationalization , which is a method used to reduce the number of SKUs or underlying component parts based on underperformance, duplication, or obsolete product statuses.

In many cases, these products can cost you more than the profit you make from them. Try to identify the products that cost your company more in inventory management expenses than the profit you make from them and phase them out of production. You can put these discontinued items on sale to get them off the shelves fast. While offering multiple products may seem like the best way to make money, SKU rationalization is important for lowering your inventory management costs.

By performing a strategic SKU rationalization on your current product line, you can lower your overhead and storage costs to increase profit. Proven SKU Reduction Methods The following examples illustrate proven methods for reducing the number of discounted items you sell and your inventory management costs.

Get a Demo. Different departments might have different ideas as to what constitutes a redundant product and if SKU rationalization is even required. For example, the sales team might have the opinion that a large product mix could help the company cater to a larger number of customers and dominate the market.

On the other hand, the operations department might want to reduce the number of SKUs in order to minimize inventory, streamline the processes, and cut costs. That is why SKU rationalization needs to stand on a firm analytical basis: to let the data decide which products to discontinue and which ones to keep. Eliminating excess inventory is always a good idea and SKU rationalization is often one of the best things you can do for your business. Here are some of the benefits it offers:.

First of all, you will need to check whether all your offerings and their unique selling points align with the needs of your target market. Ask yourself:. If there are products that do not sell well and seem out of place considering your target audience, it is a clear sign that they should be discontinued.

For products that do align with the needs and wants of your target market, continue with the next step. There are many aspects to consider when analyzing your inventory for SKU rationalization. You need to find out whether your SKUs are balanced in their:. Companies that look at SKU rationalization as part of their overall retail operations stand to gain more and achieve their ROI forecast. So, if you are in need of exceptional Production Rationalization, feel free to try one of these seven methods to drive SKU rationalization.

Achieve more with the best one which fits perfectly into your business style. There is always room for more improvement; you only have to ready for it. Save my name, email, and website in this browser for the next time I comment. Learn More. I Write. Looking for a way to work with me and promote your business, service or product? Learn More — or — pick my brain. I Coach. So what defines a career coaching…. I Optimize. Jun 13, Dr.

Muddassir Ahmed. Supply chain. Leave a reply Comments 0. Leave a Reply Cancel reply. Leave this field empty. Signup for latest blogs and special offers!

Newsletter signup.