21 May Simplus Product Series #2 — Products and SKUs
by Erich Rusch
The Product and its corresponding Stock Keep Unit (SKU) are the foundation of everything in your product catalog. There are several essential building blocks to consider when creating, refactoring, or implementing your product catalog during a system integration. We must consider several key points during your implementation, primarily the differing needs of your front office and back office teams, the cost of maintaining your product catalog, and—if you rely heavily on a channel sales organization—the impact on your channel sales organization.
Front office vs. back office SKUs
Depending on the type of company you run, it’s possible that your organization may have very different needs in the front office versus the back office. The front office is primarily concerned with the ease of communicating the product offering and creating a frictionless selling process for your sales, service, and customer success teams. The back office needs specific information to inform manufacturing, provisioning, and fulfillment teams what to procure, resource, and deliver to meet the needs of your customers as well as how to accurately record the deal in a financial ledger and how different types of revenue are billed, invoiced, and recognized. At Simplus, we understand the complexities of both front office and back office processes, so we can craft a solution that allows front office flexibility yet meets the manufacturing, financial, and compliance needs of your back office.
Front office to back office conversion
Often, front office SKUs are referred to as marketing or sales SKUs, and back office SKUs are referred to as manufacturing or fulfillment SKUs. Take a chair, for example; in this case, the front office may use one simplified SKU that represents the final finished good—the chair. During the selling process, we generally don’t care about the wood used for the different panels or which screws are used to assemble the chair. We just care that it’s currently active in our product catalog! Therefore, we obfuscate the complexity of procuring the necessary resources to build and fulfill the order and allow for our manufacturing teams to worry about actual production during the order management process. Once in the back office, based on inventory levels of similar parts, we can break the chair down into its specific constituent wood, screws, and other components to ensure we accurately describe each component necessary to fulfill the customer needs.
Dynamic SKU generation
Another case that comes up frequently in our selling cycles is the case where although our customers are selling configured products, the backend manufacturing, provisioning, or fulfillment systems require a serialized SKU to transmit information from the front office to the back office. Salesforce CPQ has the capabilities to interpret a configured bundle and dynamically generate the corresponding backend SKU on the fly to properly inform backend systems.
Product structure, hierarchy, and selling efficiency
The goal of most of our engagements is to ensure your teams have the most efficient selling process possible. Simplifying your product catalog is one great way to achieve this. The most simplistic way to get rid of complexity is to take advantage of Salesforce CPQ’s robust product structuring capabilities to eliminate SKUs that are unnecessary, redundant, or could potentially be generated on the fly as opposed to stored in a product database. An example of this is from a high tech company in Silicon Valley, where we took packages of SKUs, numbering in the 1000s to just a handful of SKUs by removing the SKU packs and bands and leveraging Discount Schedules.
Our Advisory Services team is adept at handling these challenges and can help your organization simplify the product catalog through an SKU Rationalization workshop tailored to meet the specific industry and vertical challenges your company faces.
Once you’ve tamed your product SKUs, you can begin to create workflows to guide your reps to the right product every time with Guided Selling, Search, and Selection! Read on in our next chapter to hear more about it! In the meantime, if you have a product catalog in need of SKU rationalization, reach out to our Advisory Services team for more help!
Erich Rusch is Director of CPQ Presales Solutions at Simplus. Co-founder and CSO of CirrusOne until joining Simplus, Erich has years of experience in the CPQ space and has unparalleled expertise in cloud solutions.