SKU Rationalization – How We Limit SKUs to Save You Inventory Costs

When it comes to product lines, more isn’t always better. While diverse choices and attractive innovations are vital to our business, we also know that keeping our manufactured stone veneer offerings at the right size is the best move for our customers. At Casa di Sassi, we want to provide you with a manageable inventory that keeps your capital expenditures low and helps you avoid inconveniences like product discontinuations.

One of the best ways to manage inventory is to practice SKU rationalization. This process helps you to continually satisfy your customers while protecting your bottom line from unnecessary losses. Here’s why it’s important to look for a stone veneer manufacturer that uses SKU rationalization.

The Problems of Having Too Many SKUs

Stocking a wide range of SKUs seems to be a smart way for manufacturers to reach the largest possible audience. But ultimately, stocking hundreds or even thousands of SKUs is simply unsustainable because they won’t all perform equally well. Sooner or later, the manufacturer will have to discontinue or reduce stock levels for many products, which isn’t ideal for you and your customers.

For example, if your stone veneer manufacturer discontinues a product that your customers love, you could very well lose business. You’ll be unable to provide replacements or help new customers interested in specific discontinued products. Then, as the distributor, your company is put in a tight spot, and you end up taking the fall.

The common thread throughout these problems is that these manufacturers don’t balance their stock levels and product performance, and that’s exactly what SKU rationalization remedies.

What Is SKU Rationalization?

SKU rationalization, also called SKU optimization, is the process of analyzing products’ profitability levels to determine whether they should be kept or discontinued. This helps you optimize stock levels from both ends of the spectrum – manufacturers ensure that popular products are constantly in stock and eliminate products that aren’t profitable for them.

SKU rationalization measures sales data against storage fees and other carrying costs to provide a granular look at how each product is performing. When combined with customer relationship management, SKU optimization helps adjust stock levels to maximize operational efficiency and customer satisfaction.

Importantly, SKU rationalization allows manufacturers to always provide their customers with what they need. Since rationalizing SKUs creates an accurate picture of inventory demand versus costs, it drastically decreases the likelihood that any given product will be discontinued or even backordered.

Benefits of SKU Rationalization for Distributors

Knowing that you’re choosing a manufacturer that rationalizes its SKUs gives you way more than peace of mind. It also carries plenty of other benefits that help you distribute more effectively and continue to delight your customers. Here are just a few of the perks of pairing with a manufacturer that practices SKU optimization.

Reduced Inventory Costs

When manufacturers offer too many SKUs, they pay for it – literally. Stocking hundreds of products means expensive inventory costs that then get passed down to you at the distributor level. On the other hand, if your manufacturer streamlines its SKUs, then fewer costs will be passed on, giving you a better ROI on your stone veneer investment. This helps you keep your operational costs and pricing low while giving your customers the experiences they deserve.

Enhanced Inventory Management

Conveniently, SKU rationalization from your manufacturer helps you with your own SKU rationalization! When you’re able to buy exactly what you need and nothing more, you’re better equipped to easily track, forecast and replenish inventory.

Improved Supply Chain Efficiency

A large number of product offerings also means a longer supply chain, so if your manufacturer doesn’t optimize its SKUs, you’ll feel the logistical pain. By contrast, a leaner product catalog results helps you avoid supply chain disruptions and keeps everything moving smoothly.

Increased Profitability

Having a manufacturer with good SKU management practices directly translates to increased profitability. You can focus on high-performing SKUs instead of stocking products that simply don’t perform well. Combine that with the lower inventory costs, and you’re looking at some serious budget optimization.

The Casa di Sassi Advantage

At Casa di Sassi, we consistently rationalize our SKUs so we can offer you a curated selection of products without the pressure to purchase more than what you need. With us, you’ll never have to be faced with the problem of offloading unpopular SKUs or being stuck with leftover discontinued products.

Ready to take the next step? Become a Casa di Sassi distributor and enjoy all the benefits of our curated product catalog and personalized dealer support.