SKU rationalisation without cutting the wrong products
SKU rationalisation is the process of reviewing a product range to decide which items should be retained, simplified, consolidated or discontinued. Revenue concentration is useful evidence, but it is not enough on its own to make that decision.
Start with concentration, not deletion
Identify A, B and C products and the long tail. That establishes where revenue and volume sit without assuming that every low-revenue SKU should be removed.
Add customer context
Check whether C-products are purchased by A-customers or are strong contributors inside their own category. These relationships can make a small product commercially important.
Add profitability and complexity
Where cost and order data exist, compare margin and ordering activity with revenue. A rationalisation candidate is stronger when several pieces of evidence point in the same direction.
Compare the evidence
| Question | Revenue-only view | EightyTwenty+ view |
|---|---|---|
| Is the SKU small? | Revenue class | Revenue, quantity and hierarchy context |
| Does it matter to customers? | Usually unknown | Customer × Product relationships |
| Is it profitable? | Not necessarily visible | Separate margin analysis when cost exists |
| Does it create effort? | Not visible | Order Share vs Revenue Share where Order ID exists |