A small slice of your catalog could be eating up a disproportionate share of your warehouse—and your working capital.
If you’ve ever felt like your warehouse is bursting at the seams despite a flat revenue line, you’re not alone. In the glass, ceramics, and refractories industry, product expansion often outpaces product rationalization. Distributors trying to serve every client with precision glass coatings, ultra-high purity ceramics, and niche firebrick shapes frequently build SKU lists that swell into the thousands.
But what if you could reclaim working capital, streamline fulfillment, and reduce error rates—just by eliminating a sliver of your catalog?
The key lies in identifying and removing the bottom-performing 5% of SKUs. This isn’t about cutting corners. It’s about cutting weight.
What Does 5% Look Like?
Let’s say you carry 2,000 SKUs, a mix of standard float glass, tempered safety panels, aluminum silicate bricks, and high-temperature ceramic insulators. The bottom 5% amounts to just 100 SKUs. But those 100 items often:
Move <1 unit per quarter
Serve only 1–2 accounts
Occupy premium shelf space or require custom handling
Generate below-average margins
Add complexity to inventory management and cycle counts
According to data pulled from mid-sized distributors across Ontario and the Midwest, that bottom 5% can account for 8–15% of warehouse costs and 20–30% of picking errors. The logic is simple: uncommon SKUs are harder to store, track, and fulfill.
In one case, a Minnesota-based refractory distributor removed 94 low-velocity SKUs—including obscure arch bricks, rarely-used mortars, and experimental castables—from active inventory. Result: $180K in inventory liquidation, a 12% gain in warehouse capacity, and a 3-day improvement in cycle count time. Better yet, zero customers churned, thanks to strategic communication and substitution options.
The Cash Flow Boost
SKU rationalization is one of the few levers that hits both the balance sheet and the P&L. By trimming your weakest SKUs, you:
Free up capital: Low-impact SKUs often sit for 12+ months before selling. That’s dead cash.
Reduce carrying costs: Insurance, rent, and obsolescence risk drop with every removed pallet.
Improve purchasing power: Redirect spend toward higher-velocity SKUs and negotiate better volume terms.
For example, glass distributors who trim fringe patterned or tinted SKUs can concentrate orders on standard annealed or low-E variants—boosting fill rates and vendor rebates.
But What About Customer Impact?
The fear is understandable: what if that one custom ceramics client comes back asking for the product you just delisted? The key is to implement a “Make-to-Order” or “Special Order” status, instead of deleting SKUs entirely. This lets you de-stock the item while keeping it accessible in your system—at higher MOQs or lead times.
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Removing just 5% of low-impact SKUs may feel minor, but the ROI is anything but. It unlocks working capital, cleans up operations, and sharpens your product focus—all without alienating key accounts. In a distribution landscape defined by freight delays, inventory risk, and cash pressure, those bottom SKUs might just be your top liability.
