Excess inventory slows businesses by clogging supply chains and bloating overhead costs, prompting the need for SKU rationalization to streamline operations and optimize profits.
SKU rationalization involves an in-depth analysis of product performance across sales channels, enabling businesses to decide whether to discontinue underperforming items or increase stock of high performers. This process is crucial for maintaining alignment with market demands.
Through SKU optimization, companies analyze sales data to ensure each SKU contributes adequately to profitability, efficiency, and operational goals, determining whether to keep or remove products based on sales-to-cost ratios.
Many business owners consider SKU rationalization essential for inventory efficiency, as it reveals a comprehensive picture of sales performance against inventory holding costs, allowing better decision-making.
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