Introduction
A stock-keeping unit or SKU is a simple yet essential tool for inventory management. It’s a scannable barcode printed on product labels that enables you to identify your products and keep track of inventory in your warehouse.
Managing the SKUs in your warehouse is important as it helps you optimize your inventory control. You can achieve this through a system called SKU rationalization.
This article explores the meaning, importance, and benefits of SKU rationalization for efficient warehousing.
What Is SKU Rationalization?
SKU rationalization is a process that helps you decide which products to maintain in your inventory and which to discontinue. It allows you to justify whether you need to add, continue, or discard a product from the inventory. Using this process, you can determine the quantity of each item or the number of SKUs to retain in your warehouse inventory.
It is an effective method of managing your warehouse inventory efficiently. The main objective of efficient warehousing with SKU management is simplifying business operations.
Importance of SKU Rationalization
A consistent analysis of your SKUs is essential for your business. It can help you make smarter business decisions. Efficient warehousing with SKU management can increase your profit margins.
You can use the SKU rationalization process to enhance your business in several ways-
Identify Demand Patterns
SKU rationalization enables you to evaluate the demand for each item in your warehouse. It also helps you analyze the sales history of the item. When you perform such analysis for all the items in your inventory, you can identify their demand patterns.
This can improve the accuracy of demand forecasting, an essential component of the warehouse management system (WMS). Enhanced accuracy in demand forecasting can reduce expenses, optimize inventory, and improve customer service.
Reduce Expenses
One of the major SKU rationalization benefits is that it helps reduce inventory. When an item remains unsold for a long time in your warehouse, the chances of it becoming obsolete, spoiled, or breaking increase. This can increase your warehouse holding costs.
Efficient warehousing with SKU management can limit warehouse holding losses. This, in turn, can prevent your profits from going down. Further, you can increase your profit margin by reducing inventory carrying costs, such as labor charges, insurance, warehouse fees, etc.
Streamline Inventory Process
An accurate estimation of your warehouse inventory is important to reduce the risk of understocking or overstocking. Efficient warehousing with SKU management can help you attain this objective. Thanks to SKU rationalization, you can easily manage your inventory.
When you have fewer SKUs in your warehouse, you can streamline your packaging and distribution processes. This can mean a quicker turnaround time to ship your products. When your turnaround time improves, it can enhance customer satisfaction, which is again one of the important SKU rationalization benefits.
Optimize Product Catalog
Optimizing your product catalog is essential to provide an edge to your business. The SKU rationalization process enables you to offer the most popular products and eliminate the outdated ones. It is one of those SKU rationalization benefits that can help you beat the competition and surge ahead.
The best part about efficient warehousing with SKU management is that it can enhance your customer base. Offering customers the most popular products can increase the chance of repeat orders and profitability.
To Sum Up
Now that you know about the SKU rationalization benefits, it’s time to implement them in your warehouse. Follow the strategy of efficient warehousing with SKU management for the best results.
If you’re looking for a reliable solution to your logistics needs, Shipyaari can help you out. We offer end-to-end warehousing services, including storage, packaging, and delivery. Try out a demo for free today to learn more about us.
Shipping