How do you measure SKU performance?

Divide the number of SKUs in a range by the total number of SKUs, then multiply by 100 percent. That’s your SKU ratio for each gross profit range. Next, calculate the sales ratio. Pick a period to cover, like a year, and add up the number of units sold in each gross profit range.

What is SKU analysis?

Simply put, an SKU is a scannable barcode normally printed on product labels. Retailers usually use SKUs simply to track movement of inventory, but intelligent SKU-level analysis can transform retail profitability. It’s just about knowing how to interpret the data in the best ways.

How do you reduce SKUs?

How to Reduce SKUs

1. Select Product Categories. SKU rationalization project is not the job of inventory control people alone and a cross-functional team is required.
2. Identify Market Segment.
3. Make a List of Strategic Products.
4. Review All Other SKUs.
5. Eliminate Unnecessary SKUs.

What are the inventory metrics?

Inventory Metrics: Sales KPIs

• Inventory Turnover Rate.
• Days on Hand.
• Weeks on Hand.
• Stock to Sales Ratio.
• Sell-through Rate.
• Backorder Rate.
• Accuracy of Forecast Demand.
• Rate of Return.

What are inventory management metrics?

Top Ten Inventory Management Metrics

1. Inventory Turnover. Inventory Turnover = Cost of Goods Sold / Average Inventory.
2. Gross Margin Percent. Gross Margin Percent = (Sales – The Cost of Sales) / Sales.
3. Customer Order Fill Rate.
4. Cost Of Carrying.
5. Average Days To Sell Inventory.
6. Return On Investment.
7. Item Fill Rate.
8. Cycle Time.

What advantages are gained by reducing SKUs?

Benefits of decreasing your SKU count:

• Save storage space in the OR. Identify and combine all supplies needed into a single pack – from OR setup to cleanup.
• Reduce shelf space in your storeroom.
• Spend less time managing supplies.
• Lower your inventory carrying costs.

How many SKUs should you have?

It of course depends on the specific vertical, but a ballpark number of SKUs that Supply Chain Planners manage is typically within a range of 500 – 1000.

What is the relationship between SKU count and performance?

Complicating matters is the fact that the relationship between SKU count and a company’s performance is nonlinear in nature. Typically, if a company reduces its SKU count, the company will see a decrease in the negative impacts on operational performance described above. However, the same is not necessarily true for the sales impacts noted above.

Should you increase the number of SKUs in your operation?

Increased Facility Costs: When you increase the number of SKUs your operation handles, you increase the total space that must be allocated to inventory, which can be a challenge for smaller operations.

What should you look at when analyzing your SKUs?

By looking at your SKUs in terms of velocity, inventory turns (days on hand), storage capacity, seasonality, and storage requirements, you can walk away with a clearer understanding of your SKUs and how they impact your business. Some key takeaways from an effective SKU analysis would include:

What happens if you don’t limit the number of SKUs?

If you don’t limit the number of SKUs that your operation handles, you will eventually be forced to expand your warehouse or move to a new, larger, and more costly facility. Trapped Capital: If 80 percent of your inventory represents slow movers, this means that you have capital trapped on your warehouse racks.