Summary
This article walks through how SKUs are stratified in StockIQ and how that can aide in SKU rationalization
Applies To
All Items in StockIQ
Process
The main goal of this process is to be able to set service level goals, which in turn allow StockIQ to calculate service level targets, which in turn are used for Safety Stock calculations.
A secondary outcome of this process is that it gives you excellent measures by which to evaluate your approved stock list, and decide which items you should remove from your catalog and cease offering.
This is shown in graphic form in the Stratification Detail page, and the groups can be summarized as follows:
High Volume, Low Volatility: AX, AY, BX, BY
- These are your very best items generally
- Standard forecasting works well
- Order Point and Lot for Lot order policies work well.
- Collaboration with customers is largely only necessary for special events
Low Volume, Low Volatility: CX, CY, DX, DY
- Not common to see a lot of these
- Volatility is still low, so normal forecasting and order policies should work reasonably well.
- May want to consider Sporadic Sales policy for very low volume items, or even Buy To Order
High Volume, High Volatility: AZ, BZ
- Forecasting accurately can be difficult, so safety stocks will be high
- May want to override safety stock if suggested target is higher than you are comfortable with
- Order point ordering should work reasonably well on average, but chances of overstocks and stockouts are higher.
- Collaboration with your customers is critical to maintain proper service level if they will have highly variable demand
Low Volume, High Volatility: CZ, DZ, XZ
- Consider removing these items during your SKU rationalization process
- Attempt to substitute with other items if you can
- Should have Sporadic Sales or Buy To Order order policy if possible.