In the world of inventory management, the term SKU proliferation has gained traction over the years, and for a good reason. As consumer preferences diversify and markets expand, SKU (Stock Keeping Unit) proliferation has become both an opportunity and a challenge for businesses.
What is SKU Proliferation?
SKU proliferation refers to the rapid increase in the number of distinct products or variants a business offers based on changes in the market. While it indicates a company's attempt to cater to diverse consumer needs, it also hints at potential operational challenges.
Causes of SKU Proliferation
- Expanding Markets: As businesses enter new markets, they introduce products catering to local tastes and preferences.
- Consumer Demand: A more informed and choosy consumer base demands variations in size, flavor, color, and other product attributes.
- Competitive Landscape: In order to differentiate, companies may introduce new SKUs as an attempt to stand out amongst competitors.
Implications of SKU Proliferation
- Inventory Management: More SKUs mean more complex inventory management across the entire supply chain, from procurement to distribution. It becomes harder to forecast demand for each SKU accurately.
- Increased Operational Costs: Handling greater amounts of SKUs can increase warehousing, handling and shipping costs. Further, increasing SKUs may out a constrain on existing storage space and place greater pressure on the demand for more space.
- Risk of Obsolescence: With so many products, some might not move as quickly, leading to overstocking and increased chances of obsolescence. Products risk being placed wherever they can fit into shelving without regard for placing popular items in easily accessible areas for pickers.
Managing SKU Proliferation
- Regular SKU Review: Periodically review the SKU list to determine slow-moving items. It might make sense to phase out products that aren't generating adequate revenue or demand.
- Invest in Technology: Leveraging technology, like advanced ERP (Enterprise Resource Planning) and WMS (Warehouse Management System) solutions, can help in managing the increased complexity.
- Data-Driven Decision Making: Utilize sales data, consumer feedback, and market trends to decide on the introduction or discontinuation of SKUs.
Role of Mobile Dimensioning in Handling SKU Proliferation
- Space Optimization: Knowing the exact dimensions of each SKU allows for optimal use of warehouse space. Products can be slotted and stored in a manner that maximizes space utilization and minimizes wasted space.
- Faster Picking and Packing: Accurate dimensions enable logical organization – more frequently picked products are closer to the shipping area, where less popular items are farther away, which speeds up the picking and packing process.
- Lower Shipping Costs: More SKUs means more variety in outbound shipping. Accurate dimensional data allows for better packing strategies, reducing shipping costs.
Conclusion
SKU proliferation reflects a business's effort to resonate with diverse consumer needs. However, without proper management, it can lead to operational hiccups and increased costs. By understanding the intricacies of SKU proliferation and implementing strategic solutions, businesses can make the most of the opportunities it presents while sidestepping potential pitfalls. Mobile dimensioning is a key strategy in this endeavor, enabling businesses to efficiently manage inventory, optimize space, reduce costs, and enhance overall operational efficiency.