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Too many SKU's3/28
I have a fledgling gift/home decor/small furniture wholesale business. When I started, I added everything that anyone asked for. That was pretty stupid. I am now up to 500+ sku's. In the beginning, I was not going to inventory anything. All made to order. Well, that was very inefficient. Now that I am keeping inventory, I want to implement a computer system. I soon realized that a lot of these sku's are not selling well enough to even keep. To give you an example. I make wooden gears. I don't sell enough in a year to make any money. There more of a PITA than anything. But they help land me a really good account that sells a lot of other stuff and they love the gears.
I guess my question is, Should I keep these in the line up just in case it helps land accounts?
Very small runs also bog me down and are not worth it from a production stand point.
Sub them out?
A classic case of the 80/20 rule. You'll find that about 80% of your sales comes from about 20% of your products. You probably expend 80% of your resources making the 20% that don't sell well.
I went through the exact same thing in 2015-2016. We make bookcases and I offered 3 widths and 7 heights. I thought that if I offered custom sizing as well, and added different depths, trims styles etc that sales would really explode. Sine there were so many sizes we had to convert to a "Lean" just in time production approach.
Results were disastrous. Sales did not increase at all. Instead of being spread over just a few dozen units, sales were now spread over 100's of skus. I noticed form observing shopping sessions that people couldn't make up their mind and a lot just left.
I've been in this industry my whole life, my parents do craft shows and I grew up making and selling things from about 5 years old. No matter what you offer customers will always ask for something else. ALWAYS.
Concentrate on your best sellers. Keep them in stock, get really efficient at making them. Invest the time and money you save from not stocking non-selling items into sales and marketing.
And the best advice, learn how to say NO. When a customer asks if you can make something you know will take forever and is no money left simply say NO. It'll be tough at first, but once you start seeing your life improve by saying no you'll wish you started saying it sooner.
If you don't make much money on the gears, raise the price. Do not discontinue but rather raise the price to have one of two results. Either they don't buy as many or you make more money from each one where you are happy to make them.
I have a product that has over 1,000 variations. We make to order as we figured out a way to work to order. Much more efficient as I no longer carry over 600 units in stock. In fact, in my arena of competitors, I also have the shortest lead time. I know some them have inventory that they keep up with.
I would suggest examining your product line up and if you have slow moving items that don't make much money, raise the price so that you will happily make them when you look at the increased profit.
You might look at your methods of changing setups and see if you can greatly reduce the time. If you use a table router, don't change bits, have several routers setup ready to run. Use fixtures that drop into a table slot or bolt holes, so little time is require. Use gage blocks to set your shapers. Do some redesign to simplify and reduce required setups. You may not be able to go to batch size ONE. But I'll be you can improve flow. One of the biggest wastes is handling something without adding value. Pushing carts full of parts around is a total waste. Rearrange your equipment. Have all the required wrenches, jigs etc. within arms reach. Mark your jigs with setup information. If there are things you can't make economically, raise prices or drop them.
Been there done that!