Product Rationalization

Product Rationalization

Product Rationalization Jonathan Poland

Product rationalization is the process of reviewing and optimizing a company’s product portfolio in order to streamline operations and reduce costs. This can involve eliminating products that are no longer profitable or do not align with the company’s strategic goals, as well as consolidating similar products in order to reduce complexity and increase efficiency.

There are several key steps involved in product rationalization:

  1. Identify the products or product lines to be reviewed: This may include all products in the portfolio, or a subset of products that are underperforming or not aligned with the company’s strategy.
  2. Analyze the products: This involves gathering data on the sales, profitability, and strategic importance of each product, as well as any external factors that may impact its success.
  3. Evaluate the products: Based on the analysis, the company can determine which products should be kept, improved, or eliminated. This decision may be based on a variety of factors, including the product’s contribution to revenue, profitability, and strategic fit.
  4. Implement the changes: Once the decision has been made to rationalize the product portfolio, the company will need to implement the changes. This may involve discontinuing products, consolidating similar products, or making improvements to existing products.

Product rationalization can bring a number of benefits to a company, including reduced costs, improved efficiency, and a more focused product portfolio. However, it can also be a complex and challenging process, requiring careful analysis and planning to ensure that the changes are implemented successfully.

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PLEASE NOTE: I am not a registered investment adviser and do not provide financial advice. My work is primarily with business leaders, turning insights from the financial markets into models for growth, development, and better capital allocation.