Why High SKU Counts Are Killing Your CPQ Process

"Drowning in SKUs? You might be strangling your CPQ process."

As companies continue to expand their product offerings to cater to every niche, we're witnessing an unforeseen backlash: an overwhelmed Configure-Price-Quote (CPQ) process.

Contrary to the common belief that more options equate to better customer satisfaction, this SKU proliferation could be hindering more than helping.

The Direct Link Between SKU Count and Production Complexity

The CPQ process thrives on simplicity. It's all about configuring products, pricing them correctly, and then quoting them swiftly. Every SKU you add introduces another layer of complexity into this already intricate system. Consider this: with every SKU, there's a new product configuration, a unique price point, and a different quote to manage. It's not just addition; it's multiplication. And before you know it, the CPQ system becomes a maze where efficiency goes to die.

Advantages of Streamlined Production

• Faster Turnaround Times: Reducing the number of SKUs simplifies the configurations that need to be managed. This means the CPQ software has fewer variables to juggle, making it faster to generate accurate quotes. Quicker quotes can lead to quicker sales and increased revenue.

• Improved Production Predictability: With fewer SKUs, forecasting becomes easier. Manufacturers can anticipate demand more accurately, ensuring resources are allocated effectively, preventing waste and stockouts.

• Enhanced Efficiency and Resource Allocation: A more streamlined SKU assortment allows companies to optimize their resource allocation. This can mean less time spent on training, fewer errors in the CPQ process, and an overall smoother operation.

Conclusion

The assumption that more SKUs will always lead to more sales is a dangerous oversimplification. It's essential to strike a balance. For an efficient CPQ process, sometimes less truly is more. Before you jump on the bandwagon of adding more and more product variations, consider the potential pitfalls. It might just be time for a SKU detox.