This is something I have helped several clients with. While it is probably worth a follow up discussion, the steps I would suggest are as follows:
1) Examine the return on assets at the SKU and product family level, using gross profit as the measure of return and average inventory as the investment
2) Array the products and product families by ROI
3) The low ROI products or product families would be candidates for removal or harvesting. Exceptions would be products that are needed to compete in a particular product family or product families that have great growth potential
4) The high ROI products or families should be nurtured, looking for ways to extend their profitability
5) Review the potential product / product family action plans with the retail staff, explaining the objective and the results of the analysis. Ask for their input, suggestions or concerns.
6) Rollout out action plans with the support of your staff
I hope this is helpful.
Is this answer helpful? Schedule a free consultation with Bill.
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