Supply Chain Blog

FMCG/Pharma: How a wagging SKU tail knocks companies off-balance

Posted by Dave Jordan on Tue, Oct 09, 2012

When the biology teacher tells you humans have a tail your ears prick up and you wait for the punch line and inevitable student guffaw.  But it’s true! Our coccyx or tailbone is what remains of our lost tail.

All mammals have a tail at one point in their development; in humans, it is present for a period of 4 weeks, during stages 14 to 22 of human embryogenesis. This tail is most prominent in human embryos 31–35 days old. The tailbone, located at the end of the spine, has lost its original function in assisting balance and mobility, though it still serves some secondary functions, such as being an attachment point for muscles, which explains why it has not degraded further. Thanks Wiki!

Can you imagine living with a real live clearly defined tail? Think of all the designs we take for granted that would have to be redeveloped; denim jeans, SCUBA gear, even chairs.  Also, would the sight of Pippa Middleton with a tail flopping about down the Abbey have created quite such a stir?

Anyway, the key point is that the human tail has lost its “original function in assisting balance and mobility”. We do not need a tail to stand up, move or balance like many other mammals continue to do. Human development has not been matched in the worlds of FMCG and Pharmaceuticals. Here the sku tails flops around uncontrollably creating quite opposite effects to our ancient appendage, i.e. imbalance and immobility.

Despite all the wisdom that screams at companies to routinely evaluate and trim their sku tail few achieve operational excellence in this area. Take a look at your own tail and see which skus are really driving your performance – probably a surprising few along the lines of Pareto. What will be having a greater and negative effect on your performance will be a tail full of old, boring, tired, unprofitable skus that seem to stick like glue.

There always seems to be a “good” reason to keep certain skus and perhaps there are special range or regional cases but far too many companies endure tails that simply drain cash, take up space and the attention of valuable human resource. Why would you employ someone to work on unprofitable brands or skus? Get the best employees on the skus that work and help you grow.  Take a look at your own company; you may be shocked to find some employees are actually generating zero profit, at best!

If you desire growth in these difficult times then one way to help is not to allow your lengthy sku tail to“wag the dog”.

 

SKU Complexity Reduction

Tagss: SKU, FMCG, Dave Jordan, Supply Chain, Forecasting & Demand Planning, Inventory Management & Stock Control