In 2020, Rockwool reduced their SKU's from over 100.000 to around 39.000 - without compromising service levels or profitability.
The key was to create an overview of their extensive product portfolio and what it cost them in efficiency, resources, and bottom line.
Rockwool Group is one of the world's leading suppliers of stone wool, but their work with complexity management is also relevant for SMEs.
Because even if you don't have 100.000 SKUs yourself, complexity grows rapidly in the shadows.
A large part of the complexity at Rockwool was due to their extensive assortment which included a multitude of customized solutions as well as regional divisions, each managing their own product assortments and associated local regulations.
As the company grew and added new product variants, customers, and markets, complexity increased - and this heightened the requirements for efficiency and oversight.
"Every time a product was added, it was because there was demand," states Alexandria Trattner, former Supply Chain Specialist at Rockwool, to DTU.
“But in the industry sector, generally, it's problematic that companies only have procedures for initiating new types of production - similar procedures for phasing out these products are missing” (read more).
Rockwool realized they had lost oversight and lacked insight into their customers' and products' profitability. More specifically, they noticed that:
Despite this, the organization spent time and resources maintaining them.
Also read: Guide: How to achieve profitable growth