Manufacturers trim SKUs

Food manufacturers are cutting back the number of product variations they make, betting that fewer stock keeping units can lower costs and steady supply. (supplychaindive.com) At a March 25 Food Manufacturing Summit, Kearney principal Mihir Tamhankar said brands are shifting toward fewer stock keeping units, with larger companies making the deepest cuts. Bain partner Dheera Anand said companies are separating “good complexity” that drives sales from “bad complexity” that adds cost without enough benefit. (supplychaindive.com) Anand said manufacturers are also changing how they hold backup inventory, keeping more buffer stock for long lead-time ingredients and tighter buffers for short-shelf-life or easily replaced items. She said high holding costs, high interest rates and perishability make that balancing act harder. (supplychaindive.com) The push comes as consumer packaged goods growth has slowed after the inflation surge. Bain said global consumer products retail sales value rose 7.5% to $7.5 trillion in 2024, down from 9.3% growth in 2023 and 9.8% in 2022. (bain.com) PwC said in an August 13, 2025 survey of more than 200 global senior executives that 49% of consumer packaged goods leaders think their current business structure will not hold up for another decade. The same report said growth had slowed to single digits in many categories, with some flat or declining. (pwc.com) Inside factories, every extra flavor, size or pack type can mean more changeovers, more ingredients, more packaging and more forecasting errors. L.E.K. Consulting said a Fortune 500 food and beverage client had let stock keeping unit growth drive lower margins and weaker service levels before launching a simplification program across more than 20 categories. (lek.com) L.E.K. said that review found some product flows moving through five or more manufacturing and distribution nodes, while plants had drifted away from minimum run quantities and lost efficiency. The firm said the company built a stock keeping unit-level model that weighed complexity, profitability and value to consumers, customers and the business. (lek.com) The supply-chain backdrop has also changed since the pandemic. Boston Consulting Group said in July 2025 that companies are moving away from single global supply chains and toward regional sourcing, redundancy and contract manufacturing to balance resilience with cost. (bcg.com) That leaves food makers trying to offer enough choice to keep shoppers while removing slow sellers that tie up cash, labor and warehouse space. The result is not an end to variety, but a more selective version of it. (supplychaindive.com)