Proceedings of the 9^th International Conference on Operations and Supply Chain Management, Vietnam, 2019

Loris Battistello
Department of Technology, Management and Economics, Technical University of Denmark

Alexandria Trattner
Department of Technology, Management and Economics, Technical University of Denmark

Lars Hvam
Department of Technology, Management and Economics, Technical University of Denmark

Product variety management is a multi-faceted field built on the contributions from the marketing, economics, and operations management domains. Product Variety can be introduced for strategic purpose or for increasing the market share. However, with the increasing variety may also come increasing costs and customer confusion due to difficulty in distinguishing products from one another. Many CEO’s would like to reduce product variety, but fail to implement it in their organization or meet difficulties in implementing the reduction of product variety in the pace and to the degree they would prefer. The aim of this paper is to identify the most important challenges in the implementation of a product portfolio simplification strategy, analyzing the barriers found in the literature and, based on a case study, identifying new barriers not yet described in literature. Product Variety Management and stock keeping unit (SKU) rationalization are highly researched subjects both from an academic and a practitioner vantage point. Different case studies and research project studied the impact of an assortment reduction. Nevertheless, a collection of the main barrier in the implementation of a product variety management strategy is not present in the academic literature. We found that the main barriers are not only related to the business and organizational context, but they are deeply affected by the culture and the personality of the people involved in the implementation of the SKU rationalization strategy. The contribution of this project is a list of barriers that can be used by managers as a guide for implementing a SKU rationalization. Such an overview would reveal where the management should focus attention and resources in order to overcome skepticism and even resistance in the implementation of the strategy. This research indicates which aspects should be considered more in the further research on SKU reduction. The case study provided additional barriers not considered in the literature.

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