Describe the internal and external forces that drives SKU commonality.

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Answer 1

Answer #1

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Following are the forces driving SKU commonality

INTERNAL

Commonality gives cost reduction due to various advantages such as volume discount from suppliers
Commonality increases production efficiency since it brings economy of scale and decreases set-up time
Commonality is preferred due to the importance of holding lesser inventory
Commonality may be driven by a strategy to mimic competition

EXTERNAL

Commonality may be driven by customer preferences to specific SKU
Commonality may be driven by regulatory requirements, for example, some compound can only be sold in a specified maximum size
Commonality may be driven by the need to be integrable with third-party elements

Answer 2

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