Cutting Complexity and Improving Margins with SKU Rationalisation
Data-Driven Profitability Analysis for Sustainable Growth
In today’s hyper-competitive markets, complexity is a silent margin killer. Over time, product assortments expand as sales teams chase incremental revenue, marketing experiments with new SKUs, and customers request custom variations. The result? Bloated catalogs, operational inefficiencies, and hidden costs that erode profitability.
SKU rationalisation- the strategic evaluation and reduction of stock-keeping units offers a proven way to reverse this trend. By combining data analytics with profitability analysis, companies can focus on what truly drives value while streamlining operations.
Why SKU Rationalisation Matters
Hidden Costs Add Up
Every SKU carries indirect expenses: supply-chain management, warehousing, procurement, and administrative overhead. A “low-volume” product may seem harmless, but multiplied across hundreds of SKUs, those costs snowball.Customer Experience Suffers
Too many options can confuse buyers, increase decision fatigue, and dilute your brand story. Simplifying the catalog often improves conversion rates and repeat purchases.Working Capital Gets Locked
Slow-moving SKUs tie up cash in inventory that could fund innovation, marketing, or strategic growth initiatives.
The Data + Profitability Framework
Successful SKU rationalisation blends data science with financial insight. Intuitico recommends a structured approach:
1. Comprehensive Data Collection
Sales velocity and revenue contribution
Gross margin by SKU
Inventory turnover and carrying costs
Customer order frequency and retention impact
2. Profitability Segmentation
Use advanced analytics to rank SKUs by margin, volume, and strategic value. This often reveals the classic “80/20” pattern where 20 % of SKUs deliver 80 % of profit.
3. Scenario Modeling
Simulate the effect of removing or consolidating SKUs on production scheduling, logistics, and customer satisfaction before making changes.
4. Execution and Monitoring
Phase out underperforming SKUs while communicating clearly with sales teams and key customers. Establish KPIs to track margin improvement and operational efficiency.
SEO Considerations for Better Visibility
To ensure your SKU rationalisation strategy content reaches the right audience:
Target Keywords: “SKU rationalisation,” “product portfolio optimisation,” “margin improvement,” and “data-driven profitability.”
Structured Content: Use H2/H3 sub-headings (like this post) for better crawlability.
Internal Linking: Link to related resources on your site, such as analytics case studies or supply-chain optimization articles.
Meta Description: Craft a concise, keyword-rich summary (around 155 characters) highlighting the benefits of data-driven SKU management.
Intuitico’s Advantage
At Intuitico, we specialise in data analytics solutions for construction materials and wholesale distribution, turning complex product catalogs into lean, profitable portfolios. Our tailored dashboards and profitability models help you decide with confidence which SKUs to keep, merge, or retire.
Ready to Cut Complexity and Boost Margins?
Intuitico can help you analyse your data, identify low-performing SKUs, and improve profitability—without risking customer satisfaction.
👉 Visit www.intuitico.io or email us at will.chen@intuitico.io to start your journey today.
For a free 30-minute consultation, book a meeting here.
