ECOMMERCE & MARKETING – PRODUCT & INVENTORY MANAGEMENT CALCULATOR
Sku Rationalisation
A precise tool.
What is the Sku Rationalisation & How does it work?
SKU rationalization is the process of reducing the number of SKUs (Stock Keeping Units) in an inventory to simplify management and improve efficiency. By concentrating revenue on a smaller set of high-performing SKUs, businesses can reduce costs associated with storage, handling, and marketing.
The formula for calculating the revenue concentration by SKU is given by: [ text{Revenue Concentration} = frac{sum_{i=1}^{n} (R_i times Q_i)}{sum_{i=1}^{n} R_i} ] where and .
R_i
R_i = Revenue of SKU i
Q_i
Q_i = Quantity sold of SKU i
This metric helps in identifying which SKUs are driving the most revenue and should be retained, while others can be phased out or consolidated to streamline operations.
Parameters
Result
—
Frequently Asked Questions
What is SKU rationalization?
SKU rationalization is reducing the number of SKUs in your inventory to focus on high-performing products, lowering costs.
How do I calculate revenue concentration by SKU?
Multiply each SKU’s revenue by its quantity, sum these values, then divide by total revenue across all SKUs.
Why is SKU rationalization important for businesses?
It simplifies inventory management, reduces costs associated with storage and marketing, and focuses on high-revenue products.
What does the revenue concentration formula represent?
The formula calculates how much of your total revenue is concentrated in each SKU, helping identify top-performing items.
How can I use this calculator to improve my business?
By inputting your SKU data, you can identify which products are driving most of your revenue and focus on those for better efficiency.
What are the benefits of reducing SKU numbers?
Reducing SKUs decreases storage costs, simplifies supply chain management, and allows for more targeted marketing efforts.
Can this calculator help with inventory optimization?
Yes, by showing which SKUs contribute most to revenue, you can optimize your inventory levels and reduce excess stock.
Results are for informational purposes only and do not constitute professional advice.