What is SKU Rationalisation?
SKU rationalization is a process that allows merchants to measure the profitability of the products they’re stocking. It uses metrics such as inventory and storage costs, supplier fees, and historical sales data to help determine whether an item should be discontinued or retained with some adjustments.
How do you rationalize SKUs?
SKU rationalization is the process of analyzing your current products and eliminating SKUs that aren’t performing or are redundant within your product line. By editing the number of products you offer and rationalizing your SKUs, you can make balanced inventory management easier to achieve.
What is inventory rationalization?
Definition: Inventory Rationalization The action of attempting to explain or justify behavior or an attitude with logical reasons, even if these are not appropriate. The action of reorganizing a processor system so as to make it more logical and consistent.
What is SKU simplification?
“SKU Rationalization, also known as SKU Optimization or Product Rationalization, is the decision-making process to determine if a particular product should be kept or discontinued. So the company can reduce inventory costs and cut down on complexities in procurement, production and distribution processes.”
Why is SKU rationalization important?
SKU rationalization leads to smarter business decisions and improves several areas of a business’s operations including; Reducing inventory carrying costs. Streamlined inventory management workflows. Less shrinkage caused by stale or outdated inventory.
What is SKU in supply chain?
Key Takeaways. A stock-keeping unit (SKU) is a scannable bar code to help vendors automatically track the movement of inventory. SKUs are also used for units of repair time units, services, and warranties. SKUs help vendors determine which products require reordering and provide sales data.
How do you manage SKUs?
The best way to manage SKUs is to implement a simple format to ensure an easy-to-memorize structure. Avoid letters and numbers that could be mistaken for one another, and always use capital letters to prevent confusion. Group all of the similar products together, and keep SKU codes short.
What is the issue with having too many SKUs?
Companies with too many SKUs will run out of physical space in storage centers, will have more difficulty working with stock, will spend more money finding, sorting, and shipping stock, will tie up capital in dead and obsolete stock, could have tax issues relating to the extra inventory, and even have issues with …
What is SKU proliferation?
In its simplest terms, SKU Proliferation is the process in which a retailer or distributor increases the number of products (SKUs) that it offers to customers. For example, a distributor of hygiene products might start out offering just five different SKUs for toothpaste.
Why is SKU important?
The Importance of SKUs Identifying a specific product. Tracking inventory to know how many of a specific product is available. Helping identify reorder point for products. Helping customers save time by enabling them to find products quickly.
What advantages are gained by reducing SKUs?
Benefits of decreasing your SKU count:
- Save storage space in the OR. Identify and combine all supplies needed into a single pack – from OR setup to cleanup.
- Reduce shelf space in your storeroom.
- Spend less time managing supplies.
- Lower your inventory carrying costs.
What is the purpose of a SKU?
A stock-keeping unit (SKU) is a scannable bar code to help vendors automatically track the movement of inventory. SKUs are also used for units of repair time units, services, and warranties. SKUs help vendors determine which products require reordering and provide sales data.
