Kristin Holcomb Stahl '92 Describes P&G's Work to Declutter Store Shelves
A recent Wall Street Journal article discussed the number of new toothpaste varieties, as an example of how new product introductions have led to proliferation on store shelves and shopper confusion. Kristin Holcomb Stahl '92 is doing something about this problem. As a Supply Network Leader at Procter and Gamble, she led a three year project to determine the right level for the introduction of new products and the deletion of old ones across P&G's cosmetic business. She is now involved with expanding this approach across P&G globally.
Stahl described this work at a recent Engineering Enterprise Colloquium session in a talk entitled "SKU Portfolio Optimization: When the Shelves Become Cluttered." At Cornell she was business team leader for the 1992 Cornell FSAE Race Car Championship Team and has been with P&G for 18 years.
Stahl introduced the problem of SKU proliferation by playing a segment from "The Colbert Report" about a voluntary recall of two varieties of Pringles snacks, a P&G product line. (The sale of Pringles to Diamond Foods was announced April 5). In the segment, Colbert gives dramatic evidence of the many ways a single brand is represented on store shelves. SKU stands for Stock Keeping Unit, the fundamental product identifier embodied in bar codes.
Dealing with SKU proliferation entails balancing the needs of the company, the retailers who are direct customers of P&G, shoppers, and the eventual consumers of the products, according to Stahl. That means a multifunctional approach, with different teams within P&G representing the needs. Stahl advocates for "data as a way of getting resolution," noting that "when you don't have the data, emotion substitutes for it. Thank goodness for computers, data, and systems that interconnect," she said.
Fortunately P&G has a "Mega Data Base" that enabled a consistent analysis of some 70,000 SKUs. The data were used with "what if" analysis tools to assess the contribution of changes to an output measure based the sales contribution of each SKU.
Stahl described an example of a product line for which the number of SKUs was reduced by 35% and the sales increased 32% in the same period. Part of this success was due to a strategic focus on identifying "consumer need gaps" that R&D could close, and on making room for the resulting new products on the shelf. Another example was an effort that reduced the number of SKUs from 177 to 115 and cut costs by decreasing operational complexity and leveraging economies of scale. In order to improve the shopper experience, Stahl's team also devised a new store display system that provides information to help the shopper make the right selection. Overall, de-cluttering the shelves improved the shopping experience and drove sales up, increasing turnover on the store shelves.