SKU creep refers to the gradual and often uncontrolled increase in the number of stock-keeping units (SKUs) a business offers. It usually starts innocently: a new flavor, a custom size, a customer-specific variant. SKU creep is dangerous because it often goes unnoticed until it’s too late. If you’ve ever found yourself drowning in slow-moving inventory or wondering why your storage costs are skyrocketing, SKU creep could be the reason.

1. Perform a Full SKU Audit

Start by analyzing every product in your catalog. Look at:

• Sales velocity
• Gross margin contribution
• Inventory turnover
• Return rates

Categorize products into fast-movers, steady-sellers, and dead stock. Use this data to identify low-value SKUs ripe for retirement.

2. Establish SKU Rationalization Criteria

Before launching or retaining a product, apply clear standards. Ask:

• Does it meet a minimum margin?
• Does it sell at least X units per month?
• Does it serve a unique customer segment?

Stick to these benchmarks consistently.

3. Implement Lifecycle Management

Every SKU should have a plan, from launch to end-of-life, to avoid SKU creep. Monitor performance regularly and phase out underperformers proactively. Use visual management boards or digital tools to track this lifecycle in real time.

4. Use ABC Inventory Analysis

Sort SKUs into three buckets:

• A: Top 20% of SKUs driving 80% of sales
• B: Moderate performers
• C: Low performers—most vulnerable to being cut

Focus on maximizing A and B while reviewing C for rationalization or bundling.

5. Automate SKU Performance Reporting

Use dashboards and alerts to monitor SKU health. Include KPIs like:

• Weekly sales trends
• Inventory turnover ratios
• Gross margin return on investment (GMROI)

Automation ensures you catch issues early.

6. Create a New SKU Request Protocol

Make new SKUs earn their spot. Require:

• A business case
• Sales forecasts
• Supplier validation
• Approval from the SKU governance team

This gatekeeping helps keep creep in check.

7. Use ERP or PIM Systems for SKU Control

Enterprise Resource Planning (ERP) or Product Information Management (PIM) systems can:

• Flag duplicate SKUs
• Standardize naming conventions
• Enforce metadata requirements

These tools reduce the chaos of SKU sprawl.

8. Set Strategic SKU Limits by Category

Put a cap on how many SKUs each category can hold. For example:

• T-shirts: Max 25 SKUs
• Skincare: Max 15 SKUs

This forces teams to make smarter, more strategic additions.

SKU creep is one of those sneaky business problems that can quietly crush profits if left unmanaged. But the good news? You can regain control! The sooner you manage SKU creep, the faster you unlock operational clarity and scalability.

Need help managing your inventory? Speak to a Specialist.