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The not-impossible task of wrangling your SKUs with NPI

Suppliers and retailers constantly complain that upwards of five percent of their stock keeping units (SKUs) are inaccurate in one way or another. Often, product managers are using multiple, disparate systems to input information about their new SKUs, which causes compounding issues, such as duplicate or conflicting entries. And for manufacturers, this can equate to issues with suppliers, or significant delays in getting a product to market.

Product managers at complex organizations - particularly those with new SKUs being created and brought into the market all the time, need tools designed precisely to navigate the new product introduction process (NPI) and all its complexities. Why? NPI tools create repeatability, which is essential to rapid growth. Primarily, NPI tools come packaged with a larger product lifecycle management (PLM) system designed to aide companies through engineering and manufacturing.

Let’s say there’s a manufacturer that develops a telematics device for insurance companies that want to analyze driver data and make better underwriting decisions, all to help their customers save money. The SKU situation here might seem simple—there’s just a single product, after all—but the reality is quite the opposite. A wide range of car models, different firmware needs, updates, and specific requirements from their customers all add complexity to the NPI process.

The creation of SKUs

This telematics device manufacturer uses their NPI tools to formulate a SKU creation process that is repeatable and understandable by everyone in the organization. It follows a number of best practices regarding SKU creation, such as:

- Never starting an item number with zero
- Avoiding letters that are easily confused with numbers: O, I, and L, mostly
- Not loading item numbers with meaning, like trying to use numbers for colors
- Organizing information based on importance for at-a-glance understanding and sorting

Because this is a stage-gate deliverable that’s required by the NPI process to move from one stage to another, it’s built-in to the workflow and happens exactly the same way every time—no ad-hoc, unexpected changes here. Product managers at the company need to create new SKUs for specific versions of their products that match up with different car models, as well as when there’s updates to the firmware. Even packaging and changes to documentation can require a new SKU.

Not every business process uses the same item definitions—for example, warehousing might not think about products the same way that manufacturing does. Luckily, this telematics company has a PLM system that’s tied into their CRM and other business functions. They need only to create one master item SKU/definition, which is then broken down into smaller assets for these different business functions. With NPI tools, this single process immediately diffuses throughout the organization, and follows predefined logic for the best visibility.

When SKUs need to be revised

The telematics company is responsible for creating several different SKUs for different needs—a Toyota versus Maserati, for example—but also needs to rapidly revise their products based on new vehicle models or the revisions automakers introduce into vehicle firmware. Essentially, the company needs to work back through the NPI process and understand how these changes will affect their product, how they’ll deal with it, and adjust accordingly.

Again, workflow management ensures that this revision process continues in a logical, expected way, reducing the risk of revising a SKU in a way that causes slowdowns in software engineering or manufacturing. By giving the product manager full visibility into the progress of these revisions, the PLM system enables rapid responses to potential issues and automatically integrates with other systems for full visibility.

Dealing with obsolete SKUs

Because of the rapid, constant revision of vehicles every year in addition to the advent of new technology being deployed under the hood, the telematics device company often needs to obsolete their products rather than revise them. Sometimes, automakers simply stop selling a particular vehicle, or—in more dramatic cases—automakers stop producing vehicles altogether.

Instead of mourning the loss of SKUs, the company instead chooses to use it as an opportunity to begin another NPI process based on the failures and successes of the past cycle.

- What was achieved effectively, and what could have been done better?
- How did their insurance company customers respond to the product, and was it both productive and profitable for the company to pursue?
- Could the entire NPI process be sped up, and if so, how?

Because they’re working within a PLM system that keeps all product information in a single place, it’s easy to put obsolete information in the past.