What is SKU rationalization

It's for this reason that every order fulfillment operation should understand sku rationalization, and do their best to build it into their workflow.Organizations use sku (or product) rationalization to decide which items to keep/order more of, reduce or eliminate in inventory based on historical sales data, weighing the cost of producing and stocking against the benefit of selling each product.Sku rationalization also leads to more impactful marketing strategies.These may increase revenues, but of course,.Sku rationalization is the process by which companies consolidate duplicate or similar skus or specifications across their product lines, enabling benefits such as cost savings and operational efficiencies.

However, there can be specific reasons a company stocks less profitable goods.The term sku rationalization refers to the process of examining your existing products and eliminating any skus that are underperforming or unneeded within your catalog.Getting it right can be the difference between hitting and missing profitability goals.This kind of decision making is driven largely by which goods are profitable, high demand products.This is done in order to minimize inventory, reduce ordering and holding costs, and make business processes as lean as possible.

One of the crucial factors affected by sku rationalization is the days inventory outstanding (dio), the number of days you hold a product in your inventory before it's sold.Sku rationalization is used to help retailers and other concerned parties determine which products they should keep on the shelves, which products they should be ordering more of, which products they should order less of.Sku rationalization is the process of analyzing the impact to an operation that will come from adding, discontinuing, or maintaining a particular product or product line.In sku rationalization, you analyze your current physical inventory data, eliminate the products that are not performing well, and make other necessary inventory adjustments.