What’s my biggest achivement as a supply chain consultant?
I pruned about 55 SKUs (finished products) at a client. (roughly about 8% of the SKU base then)
What’s the big deal?
SKU proliferation is the single biggest deterrent of efficient supply chain operations. For every SKU pruned, you unleash significant capacity (a highly non linear relationship there). Change-over times, set up times, inventory management, purchase orders not worth the paper it’s printed on, production lot sizes that will expire before it sells. Basically ‘chindi’ SKUs.
Of course, there WILL be backlash from Sales guys who are ever eager to launch yet another line extension just because a competitor has one. Usually just another packaging. Without much thought on what customer segments/ markets does this SKU really serve.
How did I do it?
I showed them exactly how much money they have lost and are likely to lose by having those SKUs. That includes massive inventories of raw materials and packaging materials that lay in the warehouses for several months. Accumulating larva. The tradeoff analysis was tempting for the leadership. (these SKUs existed for more than a decade)
Whats the science at work?
Just simulate the supply plan by removing the demand for these SKUs. Document how much capacity utilization breach happens.
