Assortment management: Going beyond the 80:20 rule
How much do you really know about your assortment? Do you know which items offer the greatest return or which are most important to your customers? Equally, do you know which items are costing you money?
It is no secret that for many businesses, 80% of the turnover is generated by just 20% of the assortment. Given that such a large proportion of the assortment seemingly offers such little value to the business, you would be forgiven for focusing all of your attention on the best performing lines. However, inventory decisions should not be taken lightly and businesses should strive to manage their entire assortment as effectively as possible.
How can you maximise the performance of your assortment while minimising unnecessary costs? This article highlights 5 top tips to help boost the profitability of your assortment, minimise risk and help you manage your inventory more effectively.
Optimise your assortment
Unless you have a complete understanding of your assortment, how can you be sure that you are making the right inventory decision? After all, while a slow moving line may seem like a costly waste of space in your DC, for certain customers, these items could well be the main reason they buy from your business. Equally, if an item offers only a minimal return in terms of customer benefit or profit, is it worth investing time and money ensuring this item is always available?
For many businesses, a well-structured ABC analysis can indicate the performance of the assortment and highlight areas which require more attention. From service levels to stocking decision, the insights provided by the ABC analysis should be used as a driving force to shape your assortment and optimise the performance of all your items. Download the full article to discover 5 steps you can adopt today to help reduce inventory levels, increase availability and ultimately help ensure your business achieves its overall corporate goals.