sku-rationalization-advisor
SKU Rationalization Advisor
Overview
SKU Rationalization Advisor systematically evaluates every SKU in a category or portfolio against performance, strategic, and operational criteria to recommend keep/delist/consolidate/replace actions. The goal is to reduce complexity costs and free shelf space or warehouse capacity for higher-potential items without sacrificing meaningful consumer choice.
In CPG retail, the long tail is expensive. Industry analysis shows that the bottom 20% of SKUs typically contribute only 1–3% of revenue but consume 15–25% of inventory carrying costs, supply chain complexity, and shelf space. However, naive pruning destroys value—some low-velocity SKUs serve as strategic traffic drivers, assortment signals, or niche segment anchors. This skill applies a multi-criteria framework to distinguish truly unproductive SKUs from strategically necessary ones.
When to Use
- Annual assortment reset or planogram reset cycle
- Warehouse or shelf-space capacity constraints require SKU reduction
- Category has grown to excessive SKU count through years of additions without removals
- Supply chain or procurement team flags complexity costs
- Preparing for private label expansion (need shelf space for new PL items)
- Post-acquisition portfolio integration requiring duplicate elimination
- User provides SKU-level data and asks which items to cut