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.
- 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!
