Posted by Megan Moyer
As I mentioned in my last post, a couple of years ago we authored a white paper that was sponsored by HDMA and CHPA about supply chain collaboration and how it could help all involved improve their success in independent pharmacy. I previously wrote about an action item for wholesalers from that paper – to develop programs that provide results for manufacturers. Today I want to examine the next suggested action – focus on SKU rationalization.
Many of you are already going through SKU rationalization to some extent. Reviewing sales reports to determine which items are stagnant (or selling well); coming up with ways to eliminate and replace low velocity items while increasing inventory or adding line extensions of high performers. Of course, that’s just one aspect of coming to a decision about your product assortment. Likely, you are considering competition in your markets, product availability, as well as your merchandising strategy.
But one of the most important parts of SKU rationalization is the personal aspect of it: your shoppers. Shopper preferences should be a significant factor of your rationalization program. You must consider what your shoppers’ expectations are and how you can continue to meet them as you refine your store-level product assortment. Refer to research that indicates consumer decision trees for each category and behavior studies to gain insight into how your target audience will react to the variety of 
items you plan to offer in each category.
Get your supply chain partners involved. Many manufacturers can provide the decision tree information and maybe even the behavior studies. Or maybe you can collaborate on gathering that information. Involve the stores you serve to supplement the broad-based research with real-world particulars. As a concerted effort, SKU rationalization can bring the return on inventory investment you want without compromising the shopper experience.
The next blog will discuss the last action item – fostering your supplier relationships.
