SKU visibility
Many businesses find it difficult to make effective fact-based decisions at a detail level – for example, selecting, developing and promoting products based not just on sales value/units, but also profitability and/or stock risk of every SKU; such information is often only ever calculated at department or category level, weeks or months after transactions took place.
Increasing the visibility of key measures, and making them available to all decision-makers in real-time, helps to reduce potential risks and take advantage of developing opportunities.
Our approach to SKU visibility enables you to:
- Derive primary margin from sell price, less cost, for every line/SKU
- Apportion brand / category / subcategory allowances
- Model additional off-invoice elements
- Review profitability by brand / volume / weight; enabling dialogue with your suppliers in the way that they see their business
This results in profitability model for every line/SKU, enabling hard analysis of range, promotion, cost base etc.
Case Study: Music Industry
Problem
- ~100,000 physical SKUs sold across 65 countries, but facing declining market for physical music products
- Significant challenges including stock-in-trade, returns management, minimum manufacturing runs etc.
Solution
- Gathered sales and cost data from 20+ international systems, combined to measure primary margin
- Developed product-level model of additional cost and margin-affecting elements (e.g. royalties and copyright)
- Profiled profitability of all ~100,000 items, proposed minimum annual contribution and identified ‘failing’ SKUs
Result
- Reduction in range by over 50%, with no impact on gross profit; reduction in customer choice offset by focus on popular SKUs
- One international division beat its EBITDA targets by 15%, attributed largely to improved focus on manageable range
