Portfolio health check
 
- All products (SKUs) are categorized into:
 
category A - consisting of top 80%
category B - consisting of next 15%
category C - consisting bottom 5%,
 
all based on two dimensions:
 
net sales, and
gross profit
 
As it is commonly observed, top category on both dimensions illustrates that 15% of SKUs generate 70-80% of company net sales and gross profit.
 
On the other hand, a lot of SKUs, 47% in this example, generate 0-5% of Net sales and gross profit.
 
The last combination ("CC") is to focus on on further analysis and delisting decision.
 
This excercise should be done at least once per year, before starting budgeting cycle so you can decide on delisting.