3 SKU management strategies to make the most of your inventory
How much money can a store lose in a day? When high-performing SKUs are out of stock or under-performing items are overstocked, lost opportunities add up quickly. Out-of-stocks and overstock issues cause retailers and CPG companies to lose money on a massive scale: worldwide, they lose out on $1.1 trillion – almost as much as Australia’s GDP.[1]
To reduce missed revenue opportunities, retailers and CPG companies must ensure the right products are in every store or outlet. This means taking a hard look at the way inventory is managed and making targeted improvements. Most companies have a SKU management strategy – but because they make decisions on a regional level, they miss store-specific details and make over-generalized inventory plans. Let’s look at a few strategies for SKU management that enable companies to make the most of their inventory:
Make faster adjustments to improve performance using granular, real-time insight
Advanced analytics and cloud technology are enabling retailers to visualize inventory data they have always had – seeing data in a new way opens the door to new operational insights. For example, breaking data down to SKU or attribute levels helps clarify the impact of each SKU on sales. Accessing data more quickly also makes a difference. Analytics technologies, powered by the cloud, can mine the latest sales and inventory data to surface actionable insights rapidly, replacing static sales spreadsheets. Rather than receiving monthly sales data and making inventory predictions based on point-in-time information, data can be available for sales teams to review data on a weekly – or even daily – basis.
With a visual analysis of SKU performance, executives and analytics teams are empowered to justify changes to the product portfolio. This analysis helps retailers understand trends and make more informed inventory and purchasing decisions. Likewise, these insights enable CPG companies to identify top performers, prioritize low-distribution products, and retire the right products.
Fine-tune inventory and purchasing decisions with a deeper understanding of trends
Cloud technology and advanced analytics can also take store and SKU sales data, and recommend products to add or remove from distribution to increase revenue.
For example, an apparel retailer could leverage the insight that floral print dresses are popular in a city’s downtown stores, while striped patterns are selling better in the suburban areas, to make better stocking decisions for those stores. Acting on these insights guarantees the most popular products will be on the racks, and losses due to out-of-stock and overstocked items will diminish.
Connecting granular insights to intelligent and automated analysis processes enables more accurate and efficient decision-making. Having access to company and industry sales insights improves buyers’ abilities to purchase the right amount of product and ensure it is distributed properly across outlets. Third-party data helps monitor trends in each location and determine external variables that may be affecting sales. Insights like these give companies a comprehensive view of the market and enable them to make better stocking decisions for upcoming sales seasons.
Expand access to analytical insights by leveraging a world-class platform
A data management platform with powerful analytics capabilities is essential for a modern SKU management strategy. Without a method to tap into potential organizational gold mines and find new ways to increase profits, SKU data isn’t going as far as it should be.
Managing SKU data on a world-class cloud platform gives companies a scalable solution for generating insights. Transforming data into predictive models provides insights that can be shared across teams using the cloud. With a cloud-based solution, companies can enable anywhere, anytime access to these insights, eliminating a key barrier that can come with on-premises systems. Access to real-time information also enables teams to collaborate more effectively and make informed decisions, reducing lost opportunities and improving the chances of increasing revenue.
A new way to improve your SKU management approach from Neal Analytics
Increase sales and profitability with the Neal Analytics Inventory Optimization solution, built on Microsoft Cloud technology. The solution enables firms to determine the best-performing SKUs in each market, making it easier to optimize product placement and capture additional demand. The Inventory Optimization solution also reduces production and supply chain complexity by analyzing data to identify undersold, unprofitable, winning, and core SKUs. Analysis results enable retail and CPG teams to stock the right SKUs, justify changes to the product portfolio, and have confidence that new SKU decisions will contribute to increased sales and revenue.
Interested in learning more? Try the Neal Analytics Inventory Optimization solution built on Microsoft Cloud technology on Microsoft AppSource today.
LinkedIn: ShiSh Shridhar
Twitter: @5h15h
[1] IHL Group, We Lost Australia! Retail’s $1.1 Trillion Inventory Distortion Problem, June 2015.
