ProLogis Releases New Supply Chain Research Report

Filed in archive News on May 13, 2006

ProLogis , a leading global provider of distribution facilities and services, today released the latest edition of the ProLogis Supply Chain Review entitled, "Product Proliferation -- The Scourge of Lean Supply Chains."

The report, authored by University of Denver logistics experts Paul Nuzum and Carl Johnson, explores the massive increase in individual consumer products (or SKUs, for "stock-keeping units") that has occurred globally in recent years. It also outlines some of the strategies being used by supply chain executives to cope in the new environment.

According to Yahoo Finance, key findings in the report include the following:

Findings in the report include the following:

- Product proliferation is in large part a result of the deep-seated
trend toward so-called "mass customization," in which middle-class
consumers are insisting on custom-designed, personalized products at
affordable prices.

- The problem can also be blamed in part on the widespread failure by
companies to effectively manage SKU life cycles. Many suppliers
maintain individual products long after they have been displaced or
rendered redundant by new offerings. In doing so, they introduce
unintended cost and complexity into their logistics operations.

- Supply chain managers are often at odds with their sales and marketing
departments when it comes to pruning product lines. Sales executives
typically oppose eliminating SKUs, arguing that it's better to offer a
broader range of choices to customers.

- "Postponement" -- the practice of timing production of finished
products to receipt of firm orders from customers -- is the classic
logistics strategy used by companies to neutralize the ill effects of
product proliferation. Indeed, after having implemented effective
postponement strategies, many companies have been able to expand their
product-lines and SKUs without commensurate increases in their
inventory levels.