ILOG, Cognos, and SPSS Can Help With SKU Rationalization
MichaelWatson 270002K5FS Tags:  ilog cognos wall_street_journal spss business_analtyics 4,553 Views
A recent Wall Street Journal, "Products, Products Everywhere," argued that companies do not need so many varieties of similar goods.
Manufacturers are offering more and more products by changing the "sizes, brands, colors, fabrics and flavors."
But, "instead of improving profitability, these tactics often lead to bloated product portfolios that raise a company's costs, reduce supply-chain efficiency, confuse consumers and lead to shortages of popular products."
The article offers tips for reducing the number of SKUs. But, this problem is difficult to tackle-- it involves many different groups and decisions can impact the top line and ability to compete for shelf space. At IBM, our advanced analytics solutions can add to the analysis.
Cognos helps with the Business Intelligence, allowing you to understand the demand and sales price of each SKU in each market. SPSS allows to determine which SKU's actually sell together and estimate what would happen to overall demand if SKU's were reduced. That is, if you eliminate an SKU, what will be the likely uptick in the demand of the remaining products. ILOG can help determine the true landed cost, supply chain efficiencies, and safety stock impact of a reduced SKU count.
Combined, these technologies could help you make the correct decisions on how many SKU's to eliminate and which new varieties to the market.