Every SKU Has a Cost

Every SKU has a cost—even when nobody can see it on the product P&L.

One of the recurring problems I’ve encountered in product businesses is complexity.

A new SKU rarely looks dangerous.

Maybe it’s one more feature combination.

Another regional variation.

Another price point.

Another legacy product nobody wants to discontinue.

Individually, each decision seems reasonable.

Collectively, they create a complexity tax.

• More forecasting.

• More inventory.

• More documentation.

• More testing.

• More service knowledge

• .More spare parts.

• More pricing decisions.

• More opportunities for customers and salespeople to become confused.

At CalAmp, stronger lifecycle management helped us reduce product-line complexity by 60%.

In another product-business situation, portfolio complexity was reduced by 80% while the broader business improved.

The lesson I’ve carried forward is:

Portfolio management isn’t just deciding what to add.

It’s deciding what deserves to continue consuming the organization’s attention, capital and complexity.

A product manager who only adds things isn’t really managing the portfolio.

Sometimes growth requires more products.

Sometimes growth requires fewer, better products.