Consumers and Shareholders Must Be Aware of Product Proliferation

CINCINNATI -- Consumers want more and more product options, which can literally have hundreds of different incarnations that vary by size, color, taste, market and product intention. This phenomenon in the retail world is known as SKU (stock keeping unit) Proliferation, and in reality is wreaking havoc on the economy.

According to leading business to business marketing executive Rodger Roeser, the continued growth of product lines is proving detrimental to an already soft economy. The combined effects of the current economic condition with the low rate of consumer confidence is leading to low product turnover and an increase in warehouse inventory. This combination increases the costs of goods sold, leading to less return for companies and their shareholders, and ultimately causing artificial inflation of consumer prices.

"Managing this complex flow of products and the information resulting from SKU proliferation is a significant strain of already overtaxed warehouse systems and distribution operations," Roeser, Forte Industries marketing director, said. "Warehouses are forced to maintain higher inventories and product mix, which then leads to limited visibility throughout the warehouse, stock obsolescence and a huge negative financial impact."

In addition, the increases in SKUs leads to more shipments of fewer products and a need for increased handling capabilities, further exacerbating the problem because it causes increases in shipping and handling costs. The knee jerk reaction for most organizations is raising prices and laying off labor, both of which continue to negatively impact the economy. Businesses that will thrive are those that uncover hidden costs and invest in the efficiency of their operations.

"The most critical issue is that most businesses continue to lack visibility of the real costs of doing business, and have put off upgrading or updating their facilities," Roeser continued. "Most businesses are not measuring these critical operations against any key performance indicators, and remain unclear whether they need to consolidate or expand, and when they build in the future, how to go about it. The need for continuous process improvement is no greater anywhere in the U.S. economy than it is in the distribution center."

Forte Industries is a nationally recognized B2B supply chain distribution operations improvement firm, which brings order and clarity within the supply chain logistics industry segment, enabling clients to deliver maximum shareholder value through impeccable customer service. Through objective, proven services and software, Forte delivers strategic customer advantages to businesses that provide products to major retailers, direct to consumer, manufacturers, eCommerce and others. More information can be accessed at www.forte-industries.com or by calling 513-398-2800.

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