SKU stands for “Stock Keeping Unit” and pertains to the identification of a particular product/service that uses an alphanumeric code. With SKUs, customers are easily able to distinguish individual products and tell the difference among them. While SKUs are beneficial in terms of identifying products, having too many SKUs can lead to business complexity and lead to an overabundance of suppliers, data, people, analysis, and various others. Therefore, we come to the question of, “How Many SKUs can an Individual Plan?”. With this question becoming prominent among operations, it all comes down to how dependent or difficult it is to accurately develop a forecast for production. This is where multiple variables come into play in determining the answer to this question.
Variables Associated with SKUs
The variables associated with SKUs include the following:
- Nature of Your Business and Products - Developing a plan for a mature product is much simpler than trying to plan for new products. This is because mature products have historical data and you can see the average of product sales easily, ultimately allowing you to have somewhat of an understanding and plan for the following years. Newer products have not been around long enough to adequately determine a long-term production plan.
- Data Utilized to Generate Forecast - Majority of companies will utilize a shipment or order history to accurately create a statistical forecast. With that being said, it is actually becoming much more common for companies to augment historical data with information that comes close to true consumer demand. While it takes more time for planners to review this collaborative information, it is much more insightful and beneficial to generating forecast.
- Forecast Data Completeness/Accuracy - It is important to ensure that the forecast you are viewing and utilizing are accurate and complete. This is because the less time that is spent on correcting inaccurate data, the more time you have to focus on other factors within production. While correcting business assumptions may take longer in the short-term process, this will save you much time in the long run and overall be extremely beneficial.
- Technology Used for Planning - A large percentage of companies still utilize spreadsheets for demand and supply planning. This is ultimately holding companies back from succeeding and going further, which is where they need to look into advanced technologies that can help better predict demand.
A software that can aid in eliminating SKUs is PlanetTogether’s Advanced Planning and Scheduling Software. APS is a software that can provide thorough insight into the operation and eliminate any unwanted cost and boost production efficiency.
Advanced Planning and Scheduling Software
Advanced Planning and Scheduling (APS) software has become a must for modern-day manufacturing operations due to customer demand for increased product mix and fast delivery combined with downward cost pressures. APS can be quickly integrated with a ERP/MRP software to fill gaps where these system lack planning and scheduling flexibility and accuracy. Advanced Planning and Scheduling (APS) helps planners save time while providing greater agility in updating ever-changing priorities, production schedules, and inventory plans.
- Create optimized schedules balancing production efficiency and delivery performance
- Maximize output on bottleneck resources to increase revenue
- Synchronize supply with demand to reduce inventories
- Provide company-wide visibility to capacity
- Enable scenario data-driven decision making
Implementation of Advanced Planning and Scheduling (APS) software will take your manufacturing operations to the next level of production efficiency, taking advantage of the operational data you already have in your ERP.
Related Capacity Planning Video