SKU Proliferation: Is It Reducing Your Storage Efficiency and Increasing Your Costs?

In a competitive market, offering a wide variety of products feels like a must-do to meet diverse customer demands. However, there’s a hidden challenge many businesses face: SKU proliferation and its impact on storage efficiency.

What is SKU Proliferation?

SKU proliferation is the rapid expansion of product offerings—new sizes, colours, packaging, or features—all designed to capture market share. While this strategy can boost sales, it often introduces inefficiencies that quietly affect operations:

• More Space Needed: Every new SKU requires storage, increasing warehousing costs.
• Reduced Efficiency: Low-turnover SKUs occupy valuable space, hindering the storage and management of high-demand products.
• Operational Complexity: Picking, packing, and organizing become more challenging with greater SKU variety.
• Higher Costs: Inventory holding and warehouse management expenses can significantly cut into your margins.

 Strategies to Manage SKU Proliferation Effectively

• Rationalize Your Inventory: Identify and consolidate underperforming SKUs.
• Leverage Technology: Implement tools like Warehouse Management Systems (WMS) and demand forecasting for smoother operations.
• Optimize Storage Space: Use vertical storage solutions to maximize warehouse capacity.
• Focus on Profitability: Continuously assess which SKUs add value and which drain resources.

DSL Customer Portal

We provide tools in our clients' portal that give you valuable stock management insights to keep the inventory under control.

You can get a full listing of your tock on hand at any time, or you can filter the listing by restricting it to certain categories or products.

These lists are particularly used to identify slow-moving stock or ends-of-lines that are no longer available for sale on the website but are still occupying a (costly) location in the warehouse.

Key Takeaway

It is critical to balance variety and efficiency. While SKU proliferation can boost customer satisfaction, unchecked growth may lead to operational bottlenecks and increased costs. Regularly evaluating your product mix ensures you meet customer needs without sacrificing efficiency.

If you’re looking for strategies to effectively manage your inventory, feel free to reach out!

Aaron Hobbs

aaron@dsl.co.nz

Meet Our New Robots

One of the benefits of our robotics technology is the ability for rapid deployment. It took just two weeks for Paul Howie and the Körber Supply Chain team to set up two individual Libiao Robotics sort tables.

This speed, combined with the flexibility and scalability to adapt as our business evolves, made this solution the clear choice for us. As a 3PL, we often face unpredictable variables – but with a flexible and scalable solution, we can ensure continued success both now and in the future.

Curious about how this technology can benefit your business? Reach out to us at aaron@dsl.co.nz. Let’s transform your operations together!

Click on the image below for a time-lapse of the two-week installation.

Aaron Hobbs

aaron@dsl.co.nz

Fun with Robots

TikTok movie of the team having some fun with our new state-of-the-art robot sorters.

      Movie Director: Naomi Pua

Aaron Hobbs

aaron@dsl.co.nz

Manawa Bay Shopping Mall and Couriers

Auckland's newest shopping destination, Manawa Bay, opened in September 2024. At DSL Logistics we store, pick and deliver stock for 15 of the fashion retailers in that mall.

 

Our teams were busy in the weeks leading up to the opening, coordinating initial stock orders, various ancillary activities, and even shop-fittings, helping all of our customers to achieve a successful launch at the new mall.

Some of our clients agreed to trust us with keys to their stores. That enables us to safely deliver goods to the mall well before rush hour and retail staff start work in the morning. This has worked so well that we decided to expand our own cartage capacity to deliver to other malls in Auckland, in the coming year.

Which Courier?

At DSL Logistics, we believe in giving our clients the freedom to choose the best courier for their needs. By staying completely neutral on courier selection, we’ve integrated our systems with all major courier companies.

This approach allows us to leverage our volume and negotiate the best possible rates—passing those savings directly on to you, with zero hidden markups. We also provide an optional courier account management service.

 

Aaron Hobbs

aaron@dsl.co.nz