As material handling companies focus on expanding their product offering to customers. The deployment of Stock Keeping Unit SKU is a viable route to growth. Many companies have turned to “SKU rationalization.” The method used to reduce SKUs’ numbers based on poor performance, duplication, or outdated product status.
The most common example is e-commerce retailers that require consumer packages that differ from regular open inventories.
- Product Bundles
- Single Products
- Seasonal Packaging
SKUs, as mentioned earlier, this is not universal. Each seller for a particular item will have its own supplier. Causing the sellers not to track the same number of items as a retailer easily.
Need Some Help With Your Supply Chain?
We are here with the Equipment, Software, Tools, and Expertise to get Your supply chain operating efficiently and cost-effectively.
In the Material Handling Process
When storing a product in two warehouses, you need to create two storage units to allow efficient inventory level management. Increasing the number of product names for a product category or product line increases the likelihood of errors happening as they grow. Not having a process to verify that the correct product code has been selected increases your possibility of mistakes.
If the spread of SKU is not contained, this can significantly impact your ability to operate efficiently. This is where Russell Conveyor can come in and ensure that you operate as efficiently as you can. When sales improvements cannot offset impaired operational performance, the worst may happen. However, this is an area that can affect your operations’ overall quality and the company’s functioning. Proactive measures such as monitoring the SKU can allow you to take the incremental corrective action required during your process.
I would also strongly recommend exploring the technological solutions currently available that merge significant data sources with predictive analytics engines. This will help you understand the impact of SKU distribution on sales, sales volume, and sales performance. We can use attributes-level data such as price, price-to-sales ratio, product type, etc., to determine the impact of different SKUs on the entire product portfolio.
The deepening of the analysis by constructing a questionnaire helps you refine and improve the decisions you make about individual SKUs. Analyzing attribute-level data can also help clarify each SKU’s impact on sales and help managers decide which variations from the distribution should be added or eliminated.
SKU’s and Inventory Management
Suppose you are concerned about the spread of SKU in your operations. A high-quality SKU analysis is precisely what you need to assess the impact of SKUS spread on your ability to do business effectively. Understanding the trade-offs associated with the spread of SKU can provide managers with critical insights. These insights are essential to them making the right decision-making decisions for their company.
The goal is not only to prevent the spread of SKS but also to regulate it.
As the activities expand, there is enough to create added value and not impair your company’s ability to effectively run your business. By performing SKUM analyses, it can also help you better understand how it affects your business and its impact on sales, sales volume, and performance.
Although reducing inventory would be a loss. The phasing out of non-moving SKUs from inventory and the loss’s write-down can reduce storage rack space requirements. This inventory reduction will make the picking process more efficient and cost-effective.
Merging the S&OP product portfolio process with SKU – Level Economic Value Analysis and examining the relevant factors you are targeting is a much smarter and more considered way to manage your Sku portfolio. It’s an essential step in the right direction, but it’s only part of the solution, and it’s your job to manage your SKU portfolio in a much smarter way.
While SKUs can help identify products, too many of them can lead to an overall complex business operation. This means that you don’t act as if you have a strategy or method to remove slow moving, powerful SKUs from your supply chain. SKU is so popular that the dominant process is everywhere: potential consumers can shop for the right product through any channel. While this is an essential part of a distributor’s overall business strategy, it can also create several problems that distributors need to consider.