Questions About SKU Count – Reduce or Not?

• In your portfolio of brands, which ones are candidates for SKU reduction and which are not? In each case, you must use market analysis to make sure you understand the nature of the category and the motives of the consumer.
• What drives complexity and costs in your product line? It may be SKU proliferation, and it may be trade deals or manufacturing and logistical waste.
• If you contemplate SKU reductions, will they be deep enough to affect fixed costs? Unless they are, you may be cutting off your nose to spite your face.
• How many of your SKUs are promotional? What gyrations does your organization go through to produce them? How many can you eliminate?
• What tradeoffs are you making between cost and complexity on the one hand and revenues and consumer loyalty on the other? In a premium category, not all complexity is bad. In no category is revenue reduction good.

Source:
The Complexity of Reducing Complexity
by Vijay Vishwanath
Bain & Company, 1/1/1997

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