SKU Governance

What is SKU Governance?

SKU Governance refers to the systematic management and control of a company's Stock Keeping Units (SKUs). It involves the creation, implementation, and monitoring of policies and guidelines for SKU creation, maintenance, and discontinuation. The goal of SKU Governance is to optimize inventory by ensuring that the company carries the right products in the right quantities. It helps reduce complexities by streamlining product assortment, enhance operational efficiency by eliminating redundant SKUs, and minimize costs associated with product diversity.

How does SKU Governance optimize inventory?

SKU Governance optimizes inventory by implementing policies and guidelines that help ensure the company carries the right products in the right quantities. By actively managing SKUs, companies can avoid stockouts and overstock situations, leading to improved inventory management and reduced carrying costs. SKU Governance also promotes rationalization of product assortment, eliminating redundant SKUs and focusing on the most profitable and in-demand products. This optimization helps maximize sales by efficiently utilizing resources and reducing the risk of excess inventory.

When to use SKU Governance in a company?

Companies should implement SKU Governance when faced with challenges related to SKU proliferation, inefficient inventory management, and high costs associated with product diversity. It is particularly useful for companies dealing with large product catalogs, varying SKUs from different suppliers, or complex supply chains. Implementing SKU Governance helps bring order and control to the SKU management process, allowing companies to better track and manage their inventory, reduce complexities, streamline operations, and minimize costs.

What are the best practices for SKU Governance?

Best practices for SKU Governance include establishing clear policies and guidelines for SKU creation, maintenance, and discontinuation. This involves defining criteria for introducing new SKUs, regularly reviewing and updating existing SKUs, and establishing protocols for discontinuing underperforming or obsolete SKUs. Effective SKU Governance also involves cross-functional collaboration between different teams such as procurement, marketing, sales, and operations to ensure alignment and consensus on SKU-related decisions. Regular data analysis and monitoring of SKU performance are also essential to identify trends, adjust strategies, and make informed decisions about SKU optimization.

How does SKU Governance compare to SKU management?

While SKU Governance and SKU management are related concepts, they differ in scope and focus. SKU management primarily refers to the day-to-day operational activities involved in managing a company's SKUs, such as SKU creation, maintenance, and inventory replenishment. It focuses on the operational aspects of SKU management, ensuring availability and accurate tracking of products. SKU Governance, on the other hand, encompasses a broader perspective, including the strategic and systematic management of SKUs. It involves the creation and enforcement of policies and guidelines, cross-functional collaboration, data analysis, and proactive decision-making to optimize inventory, reduce complexities, enhance operational efficiency, and minimize costs related to product diversity.