Many brands are already familiar with SKU rationalization as a business tool, but may not know they can use a similar process to find cost savings in the packaging operation. The familiar process generally involves a merchant evaluating a product’s profitability to determine if they should keep it on shelves. Generating cost savings through Packaging SKU rationalization is a bit different. It’s a process of reducing the number of packaging SKUs by evaluating the dimensions and other characteristics of a finished package.
Packaging SKU rationalization can drive cost savings opportunities in a few different ways.
- It may allow a brand to consolidate its packaging material suppliers and purchase fewer structures and sizes.
- It may provide an opportunity to reduce the amount of packaging material inventory it needs to keep on hand. Reducing the number of packaging SKUs helps a brand to better utilize its warehouse space.
- It also enables a brand to optimize asset utilization across manufacturing and packaging facilities.
Read the Packaging Digest article here to learn about the steps of conducting a successful SKU rationalization.