Friday's Wall Street Journal has a front-page story that homes in on a key issue for retail supply chains.
The subject: the current drive by retailers to trim the variety of products on their store shelves. Stores haven't adopted the Henry Ford view that customers can have in any color they want as long as it's black, but retailers are asking whether every product really needs to come in several sizes, styles, colors or flavors.
Why the current push to simplify stock-keeping units? As the WSJ article points out, one reason is the recession. Sluggish revenue has forced companies to look for ways to trim costs, and any supply chain manager will tell you that SKU proliferation has added to costs. Reducing the number of SKUs simplifies supply chains and saves money.
Of course, reduction in choices may cut into top-line revenue, but many companies have decided that the savings are worth it. The big question: is the reduction of SKUs a temporary phenomenon, or will it continue after the economy comes back?