As per an article by TCS on SKU Rationalization, facts confirm that up to 35-40% of the total inventory is stuck in the non-performing, slow moving SKUs, whose cumulative contribution to sales is less than 5%.
With the above information, you can realize how your inventory management directly impacts the bottom line results. And, when speaking about managing inventory, SKU(Stock Keeping Unit) is considered to be the key for maintaining an effective inventory management cycle for your business.
So does your inventory management practice involve SKUs? If not, let me throw some light on its results that you may not be aware of.
1. Stock transparency
Your business will deal with stock ins-and-outs on a daily basis, hence having a system to track them becomes very important to maintain correct stock levels(no more, no less). Allocating SKUs for your inventory will make it easy to determine the actual counts and help you always perform an effective inventory management practice for your business.
2. Easy stock identification
When dealing with few products, it’s possible to identify those slow moving products, damaged products, missing products or even thefts. However, when your business grows, you will have to deal with more products in order to grab every opportunities that come one’s way. This is where SKU makes it easy and quick to track stock and keep levels maintained, which automatically eliminates the risk of unforeseen events.
3. Stock replenishment
You need to ensure products are procured and available to customers all time, in order to keep the business going on. But what about those cases when your product shows as stock available, but after the customer places the order, you realize that particular inventory is not available in the warehouse. Such situations directly hampers bottom line results, and I’m sure you won’t like that to happen. Therefore, automating your inventory management processes and adding SKU to each product variations will eliminate such ugly and costly situations. Also, automation will allow you add threshold limit for every product and ensure the levels of inventory will never get out of hand.
4. Safety lock
Tracking inventory on daily basis is important for practicing an effective inventory management flow. This is done to ensure stock levels of the warehouse are in-sync to stock levels of the inventory management system. And, by adopting SKU management will help you allocate unique identifications for each product variations(size, color, etc.) making it easy to reconcile stock levels for your business.
5. Smarter stock investments
Lastly, an effective inventory management practice in place can help you save hundreds of dollars. Adopting SKU management you don’t need to worry about dead stocks scenarios, as you’ll get a clear picture of your good and bad ones. This way you can take instant inventory decisions and use your capital sensibly.
Source link: http://www.tcs.com/
Simple, yet powerful