SKU rationalisation is the process of reducing the number of SKUs (stock keeping units) in a product line in order to streamline inventory and improve efficiencies. It is usually done as part of a larger business strategy to reduce costs and simplify operations.

The first step in SKU rationalisation is to identify which products are selling well and which ones are not. This information can be gathered from sales data, customer surveys, or focus groups. Once the slow-selling SKUs have been identified, the next step is to decide whether to discontinue them or find ways to improve their sales.

In some cases, it may be possible to simply discount the slow-selling SKUs in order to clear them out of inventory. In other cases, it may be necessary to redesign the product or change the packaging in order to make it more appealing to customers. Whatever the approach, the goal of SKU rationalisation is to reduce the overall number of SKUs while still meeting customer demand. SKU rationalisation and profitability are inter-related in the sense that reducing the SKU count will lead to an increase in profitability if it is managed correctly.

How can SKU rationalisation increase profitability

SKU rationalisation is the process of reducing the number of SKUs (stock keeping units) offered by a company. It is usually undertaken in an effort to reduce costs and increase profitability. There are many ways in which SKU rationalization can increase profitability, including:

1. Reducing inventory costs: Too many SKUs can lead to high inventory levels and associated carrying costs. Reducing the number of SKUs can help to reduce these costs.

2. Simplifying the manufacturing process: Too many SKUs can complicate the manufacturing process and lead to inefficient production. Reducing the number of SKUs can help to simplify and streamline production.

3. Improving customer service: Offering too many SKUs can make it difficult for customers to find what they are looking for, leading to frustration and poor customer service. Reducing the number of SKUs offered can help improve customer service levels.

4. reducing marketing and advertising expenses: Marketing and advertising expenses can be reduced when there are fewer SKUs to promote. This is because it is easier and less expensive to promote a small number of products than a large number of products.

5. Improving gross margin: When a company offers too many SKUs, it is often necessary to discount slow-selling products in order to clear them out of inventory. This can lead to lower gross margins. Reducing the number of SKUs offered can help to improve gross margins.

SKU rationalization can be a powerful tool for increasing profitability. However, it is important to carefully consider which SKUs to eliminate and how to go about doing so. In some cases, it may be necessary to offer incentives to customers in order to persuade them to buy the remaining SKUs.

Ultimately, the goal is to reduce costs while still meeting customer demand. When done correctly, SKU rationalization can be a win-win for both businesses and customers. If you are considering SKU rationalization as a way to improve profitability, choose the best service you can find.

The process of SKU rationalization explained

The process of SKU rationalization is a systematic approach for reducing the number of SKUs (stock keeping units) in a company's merchandise mix. The goal of SKU rationalization is to reduce costs and improve efficiency by streamlining the number of products that a company offers while still meeting customer demand. To achieve this, businesses first need to identify which SKUs are underperforming and contributing the least to profitability. They then need to analyze customer behavior to determine which products can be consolidated without negatively impacting sales.

Finally, they need to put in place processes and systems to ensure that the remaining SKUs are managed effectively. Although it can be challenging, SKU rationalization can ultimately help businesses to operate more efficiently and improve bottom-line results.