Paying the Price for Outdated SKU Clusters

Publication Date 
Monday, October 26, 2015
Source 
Supply Chain Management Review

Companies often group inventory items into classes in order to manage them more efficiently. Managers routinely use these clusters or segmentations in their inventory replenishment planning decisions.

However, as companies grow and their operations expand, these classifications can become outdated. If this problem is not addressed, products can become misclassified. Inaccurate SKU classifications add cost to supply chains and hurt service levels as inventory managers misallocate resources to meet demand.

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