Range management: Are you managing your assortment effectively?
How well aligned your assortment with the overall strategy of the business? While a well thought-out assortment can generate a huge amount of profit, an ill-balanced assortment can have a hugely negative impact on a company’s margin. Use this checklist to assess the effectiveness of your assortment and gain greater insight into impact of product lifecycles of items within your range.
The majority of unsold inventories come as a direct result of the very first purchase order. Before introducing a new product, you should develop a clear process to ensure that items are phased in and out effectively. Furthermore, given that each phase of the product life cycle requires a different approach, it is vital that the inventory is managed accordingly. For example, a new product that is ready to be introduced will have very different demand characteristics to a product that is in the final phase of the PLC.
Who determines the inventory strategy for each product? In many companies, this is not clear. By aligning the assortment to the business strategy, companies can massively reduce inventory costs and while simultaneously increasing profitability. With this in mind, is assortment in line with your strategy.
"No" selected 0-3 times
You have built expertise around the management of the assortment and you have the capabilities to translate your business strategy to ensure you offer the right assortment.
"No selected 4-6 times
You have taken the first steps towards active assortment management. Some rules have been defined, but the follow-up process are not as well-structured as they should be. However, there still are a number of things that could be improved.
"No" selected 7-10 times
It's clear that your company lacks a well-structured process that enables operational processes to align with the business strategy. Many of the inventory challenges you face are likely to be caused by the fact that there are no rules for managing the assortment.