Design Distribution Centers for Profitability with SKU Profiling

Understanding how every SKU carried in your distribution center (DC) can and should contribute to your company’s bottom line; is the best way to design and run DC operations. Here’s why:

Each SKU has a potential cost impact that goes well beyond its actual purchase price.

The decisions surrounding whether a SKU should be stocked and where, and in what status it is to be held in the supply chain, impact the profitability of your company. And from a selfish standpoint, these same decisions, made without sufficient evaluation, can rob your distribution center of capacity and efficiency.

Even with a generally stronger economy, many companies continue to operate with reduced staff as a way to control costs and manage in a tighter labor market. Distribution center managers are expected to do more with less. These factors make it imperative that DCs stock only the SKUs that are profitable or have strategic value. Otherwise, companies incur unnecessary costs for labor and oversizing of DC buildings and equipment.