SKU stratification methods in the consumer products industry
Author(s)Jiang, Jiaxin, M. Eng. Massachusetts Institute of Technology; Steverson, Andrew
Stock Keeping Unit stratification methods in the consumer products industry
Massachusetts Institute of Technology. Supply Chain Management Program.
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For companies with a large number of Stock Keeping Units (SKUs), it is extremely challenging, if not impossible, to manage the SKUs individually. Therefore, companies stratify SKUs into different classes and manage them by class. Currently, most companies identify SKU stratification based on the single factor of sales volume. This thesis explores more comprehensive analysis methods that can consider multiple SKU characteristics. We applied four methods (Single Factor Analysis, Dual-Matrix Analysis, Analytical Hierarchy Process, and Cluster Analysis) to the data of a company in the Consumer Packaged Goods industry. The factors considered were velocity, volatility, and profit margin. Our research indicates that the Analytical Hierarchy Process is the most viable and comprehensive method for stratifying SKUs. It allows for a flexible number of stratification factors, different importance levels of the factors, and user control of the number of classes and class sizes. By applying the Analytical Hierarchy Process to SKU stratification, companies will be able to carry the right inventory for the right SKUs, and improve customer service.
Thesis: M. Eng. in Supply Chain Management, Massachusetts Institute of Technology, Supply Chain Management Program, 2017.Cataloged from PDF version of thesis.Includes bibliographical references (page 40).
DepartmentMassachusetts Institute of Technology. Supply Chain Management Program.
Massachusetts Institute of Technology
Supply Chain Management Program.