Product Rationalization
The Value
The value in product rationalization comes from reducing costs while improving
service and offerings. Although a vast number of companies devote great effort to
planning and executing product introductions, few spend a proportionate amount
of time managing obsolescence. Product rationalization requires elimination of
obsolete product lines, features and options and leads to improvements in COGS,
working capital and asset utilization. Companies can also expect to increase
profits as the burden of producing and distributing slow-moving products is
lifted. Valuable resources, including labor, manufacturing capacity and
distribution capacity, are consequently able to improve product offerings and
enhance service levels. The end result, in addition to cost savings, is often stronger
products leading to higher market share and customer value.