---
title: "Strategies to Operations Series 1: Assortment Index"
description: Our first blog series on inventory planning introduces the Assortment Index, a tool to be used before even thinking of introducing a new product.
image: https://blog.slsbearings.com/hubfs/Assortment%20Index-1-1.png
---
- Have any questions?
- [+65 6515 0515](tel:+6565150515)
- [enquiry@slsbearings.com.sg](mailto:enquiry@slsbearings.com.sg)
-
-
- [**](https://blog.slsbearings.com.sg/)
-
[](https://www.slsbearings.com/)
- Language:
- [English](https://www.slsbearings.com/)
- [中文](https://www.slsbearings.com/?lang=zh-hans)
- [Bahasa](https://www.slsbearings.com/?lang=ms)
- [Монгол Xэл](https://www.slsbearings.com./?lang=mn)
- [Home](https://www.slsbearings.com)
- [E-shop](https://shop.slsbearings.com/sg/)
- [Singapore](https://shop.slsbearings.com/sg/)
- [West Malaysia](https://shop.slsbearings.com/wm/)
- [About Us](https://www.slsbearings.com/about-us/)
- [Who Are We?](https://www.slsbearings.com/about-us/)
- [Business Model](https://www.slsbearings.com/about-us/creating-advantages/)
- [Key Account Management](https://www.slsbearings.com/about-us/key-account-management/)
- [People and Service Excellence](https://www.slsbearings.com/about-us/people-excellence/)
- [Warehouse](https://www.slsbearings.com/about-us/warehouse/)
- [Milestones](https://www.slsbearings.com/about-us/milestones/)
- [Partners](https://www.slsbearings.com/about-us/partners/)
- [Corporate Social Responsibility](https://www.slsbearings.com/about-us/sls-cares/)
- [Industries](https://www.slsbearings.com/industries/food-beverage/)
- [Cement](https://www.slsbearings.com/industries/cement/)
- [Food & Beverage](https://www.slsbearings.com/industries/food-beverage/)
- [Marine and Shipyards](https://www.slsbearings.com/industries/marine-and-shipyards/)
- [Medical](https://www.slsbearings.com/industries/medical/)
- [Mining](https://www.slsbearings.com/industries/mining/)
- [Oil and Gas](https://www.slsbearings.com/industries/oil-and-gas/)
- [Palm Oil](https://www.slsbearings.com/industries/palm-oil/)
- [Power Plant](https://www.slsbearings.com/industries/power-plant/)
- [Pulp and Paper](https://www.slsbearings.com/industries/pulp-and-paper/)
- [Robotic Automation](https://www.slsbearings.com/industries/robotic-automation/)
- [Semiconductor Manufacturing](https://www.slsbearings.com/industries/semiconductor-manufacturing/)
- [Steel](https://www.slsbearings.com/industries/steel/)
- [Products](https://www.slsbearings.com/products/bearings-housings/)
- [Bearings & Housings](https://www.slsbearings.com/products/bearings-housings/)
- [Belts and Pulleys](https://www.slsbearings.com/products/belts-and-pulleys/)
- [Cam Clutches](https://www.slsbearings.com/products/cam-clutches/)
- [Chains and Sprockets](https://www.slsbearings.com/products/chains-and-sprockets/)
- [Couplings](https://www.slsbearings.com/products/couplings/)
- [Gear Boxes & Gear Motors](https://www.slsbearings.com/products/)
- [Hydraulics](https://www.slsbearings.com/products/hydraulics/)
- [Linear Motion Technology](https://www.slsbearings.com/products/linear-motion-technology/)
- [Lubricants](https://www.slsbearings.com/products/material-handling/)
- [Material Handling](https://www.slsbearings.com/products/material-handling/)
- [Off-Highway Equipment Parts](https://www.slsbearings.com/products/off-highway-equipment-parts/)
- [Pneumatic](https://www.slsbearings.com/products/pneumatic/)
- [Sealing Solutions](https://www.slsbearings.com/products/sealing-solutions/)
- [Shaft Alignment](https://www.slsbearings.com/products/shaft-alignment/)
- [Services](https://www.slsbearings.com/services/)
- [Fully Integrated & Specialised Services](https://www.slsbearings.com/services/)
- [Plant Shutdown Consultancy](https://www.slsbearings.com/services/plant-shutdown-consultancy/)
- [SKF Certified Maintenance Partner (CMP) programme](https://www.slsbearings.com/services/skf-certified-maintenance-partner-cmp-programme/)
- [Machine Inspection](https://www.slsbearings.com/services/machine-inspection/)
- [Thermography Inspection](https://www.slsbearings.com/services/thermography-inspection/)
- [Shaft Alignment](https://www.slsbearings.com/services/shaft-alignment/)
- [Dynamic Balancing](https://www.slsbearings.com/services/dynamic-balancing/)
- [Predictive Maintenance of Electric Motor](https://www.slsbearings.com/services/predictive-maintenance-of-electric-motor/)
- [Training](https://www.slsbearings.com/training/)
- [Blog](https://blog.slsbearings.com/)
- [Media](https://www.slsbearings.com/media-library/youtube/)
- [Youtube](https://www.slsbearings.com/media-library/youtube/)
- [Corporate Brochure](https://www.slsbearings.com/media-library/corporate-brochure/)
- [News](https://info.slsbearings.com/sls-news-updates)
- [Career](https://www.slsbearings.com/career/)
- [Singapore](https://www.slsbearings.com/career/career-singapore/)
- [East Malaysia](https://www.slsbearings.com/career/career-east-malaysia/)
- [West Malaysia](https://www.slsbearings.com/career/west-malaysia/)
- [China](https://www.slsbearings.com/career/china/)
- [Contact Us](https://www.slsbearings.com/contact-us/)
- [Group](https://www.slsbearings.com/slsbnn/)
- [SLS Bolts & Nuts](https://www.slsbearings.com/slsbnn/)
- [Central Engineering](https://www.slsbearings.com/centralengineering/)
This is a search field with an auto-suggest feature attached.
- There are no suggestions because the search field is empty.
This is a search field with an auto-suggest feature attached.
- There are no suggestions because the search field is empty.
- [EN](https://www.slsbearings.com/)
- [ZH-HANS](https://www.slsbearings.com/?lang=zh-hans)
- [MS](https://www.slsbearings.com/?lang=ms)
- [MN](https://www.slsbearings.com/?lang=mn)
- [Home](https://www.slsbearings.com)
- [About Us](https://www.slsbearings.com/about-us/)
- [Who Are We?](https://www.slsbearings.com/about-us/)
- [Business Model](https://www.slsbearings.com/about-us/creating-advantages/)
- [Key Account Management](https://www.slsbearings.com/about-us/key-account-management/)
- [People and Service Excellence](https://www.slsbearings.com/about-us/people-excellence/)
- [Warehouse](https://www.slsbearings.com/about-us/warehouse/)
- [Milestones](https://www.slsbearings.com/about-us/milestones/)
- [Partners](https://www.slsbearings.com/about-us/partners/)
- [Corporate Social Responsibility](https://www.slsbearings.com/about-us/sls-cares/)
- [Industries](https://www.slsbearings.com/industries/food-beverage/)
- [Food & Beverage](https://www.slsbearings.com/industries/food-beverage/)
- [Marine and Shipyards](https://www.slsbearings.com/industries/marine-and-shipyards/)
- [Mining](https://www.slsbearings.com/industries/mining/)
- [Oil and Gas](https://www.slsbearings.com/industries/oil-and-gas/)
- [Palm Oil](https://www.slsbearings.com/industries/palm-oil/)
- [Power Plant](https://www.slsbearings.com/industries/power-plant/)
- [Products](https://www.slsbearings.com/products/bearings-housings/)
- [Bearings & Housings](https://www.slsbearings.com/products/bearings-housings/)
- [Belts and Pulleys](https://www.slsbearings.com/products/belts-and-pulleys/)
- [Cam Clutches](https://www.slsbearings.com/products/cam-clutches/)
- [Chains and Sprockets](https://www.slsbearings.com/products/chains-and-sprockets/)
- [Couplings](https://www.slsbearings.com/products/couplings/)
- [Gear Boxes & Gear Motors](https://www.slsbearings.com/products/)
- [Hydraulics](https://www.slsbearings.com/products/hydraulics/)
- [Lubricants](https://www.slsbearings.com/products/material-handling/)
- [Material Handling](https://www.slsbearings.com/products/material-handling/)
- [Sealing Solutions](https://www.slsbearings.com/products/sealing-solutions/)
- [Shaft Alignment](https://www.slsbearings.com/products/shaft-alignment/)
- [Services](https://www.slsbearings.com/services/)
- [Fully Integrated & Specialised Services](https://www.slsbearings.com/services/)
- [Plant Shutdown Consultancy](https://www.slsbearings.com/services/plant-shutdown-consultancy/)
- [SKF Certified Maintenance Partner (CMP) programme](https://www.slsbearings.com/services/skf-certified-maintenance-partner-cmp-programme/)
- [Machine Inspection](https://www.slsbearings.com/services/machine-inspection/)
- [Thermography Inspection](https://www.slsbearings.com/services/thermography-inspection/)
- [Shaft Alignment](https://www.slsbearings.com/services/shaft-alignment/)
- [Dynamic Balancing](https://www.slsbearings.com/services/dynamic-balancing/)
- [Predictive Maintenance of Electric Motor](https://www.slsbearings.com/services/predictive-maintenance-of-electric-motor/)
- [Training](https://www.slsbearings.com/training/)
- [Blog](https://blog.slsbearings.com/)
- [Media](https://www.slsbearings.com/media-library/youtube/)
- [Youtube](https://www.slsbearings.com/media-library/youtube/)
- [Career](https://www.slsbearings.com/career/)
- [Singapore](https://www.slsbearings.com/career/career-singapore/)
- [East Malaysia](https://www.slsbearings.com/career/career-east-malaysia/)
- [West Malaysia](https://www.slsbearings.com/career/west-malaysia/)
- [Mongolia](https://www.slsbearings.com/career/mongolia-no-vacancies/)
- [Contact Us](https://www.slsbearings.com/contact-us/)
- [Group](https://www.slsbearings.com/slsbnn/)
- [SLS Bolts & Nuts](https://www.slsbearings.com/slsbnn/)
- [Central Engineering](https://www.slsbearings.com/centralengineering/)
- [Poh Leong Tractors](http://www.pohleong.com/)
-
-
- [**](https://blog.slsbearings.com.sg/)
-
# SLS Blog
# Strategies to Operations Series 1: Assortment Index
[](https://blog.slsbearings.com/strategies-to-operations-series-1-assortment-index)
For a business to succeed, the inventory strategy must align with the overall corporate vision of the organisation. However, when it comes to executing the supply chain strategy, even seemingly small inventory management decisions can have a profound and far-reaching impact across the rest of the organisation.
As a result, it’s vital that supply chain planners have the level of insight and control required to execute supply chain tasks effectively. Put simply, without the right tools, technology, and knowledge in place, businesses simply cannot make optimal inventory decisions.
## Assortment Index
This is a tool, to be used, before even thinking of introducing a new product. Firstly, management should look at their own business and decide upon a few criteria, which are important for the introduction of a new product. This could be expected Sales (in $ or pieces), Gross Margin (in $) but also alternatives (we have already 25 similar products, why introduce number. 26), existing or new supplier, uniqueness etc. Every alternative is assigned a number of points to express importance. If we consider margin more important than uniqueness, we give more points to margin. The total number of points should be 100.
The next thing is assigning values to each parameter which tells us if the parameter scores points. Sales contributes e.g. 20 points if Expected sales is over $100,000 per year and nothing if expected sales are less. At the end, we calculate the total score. If the score is less than 40 points, we do not introduce the product, if the score is over 70 points, we do. And if the score is between 40 and 70, we re-evaluate. Of course, many of the parameters and especially the scores and thresholds are subjective. But the process is more important. We have been told that using this tool, the number of introductions went down by 70%! And this is very useful because the marketing company Nielsen stated that 90% of product introductions failed! This does not mean we should not introduce new items. But we should take a calculated risk.
The assortment-index can also be used for an existing assortment. Using the tool for this purpose has led to some very interesting results. A distributor of snack-food used the tool for introducing reasons but also for evaluating the existing portfolio. The Management defined parameter and values, and used a counter-program to evaluate all his 8,000 SKUs.
The staggering result was that they should phase out 5,000 SKUs. So, the practice did not reflect the Management’s ambition or goals of the company. After an internal struggle they phased out 3,000 products.
## *The Assortment Index Example*
We give an example of an assortment index for an item.
Columns 1,2 and 3 are criterion set by Management. The **score** in column 4 was a mix of forecast (e.g. Sales) and practice. But this could also be used for the existing portfolio in which all the data in column ‘score’ are historical data.
| **Criterion** | **Limit** | **Weight** | **Score** | **Index Score** |
| --- | --- | --- | --- | --- |
| Sales | >$10,000 | 20 | $4,000 | 0 |
| Gross Margin | 20% | 10 | 35% | 10 |
| Net Margin | >10% | 10 | 8% | 0 |
| # customers | >10/yr | 20 | 33 | 20 |
| # orders | >50/yr | 5 | 34 | 0 |
| Traffic | Yes | 10 | No | 0 |
| Alternatives | <5 | 10 | 15 | 0 |
| Earn x Turn | >120% | 10 | 80% | 0 |
| Supplier | Top 50 | 5 | No | 0 |
| ** Total** | | ** 100** | | ** 30** |
| **• Score < 40** | ** Not to be introduced / Non Stocked** |
| --- | --- |
| **• 40 < Score < 70** | ** Re-evaluate** |
| **• Score > 70** | ** Introduce / Stocked** |
As shown in the table above, looking at the total index score (30) the item should not be introduced or put it as non-stocked.
In Part 2 of our series, we will be looking at ABC/XYZ Analysis.[Please do subscribe to our blog](https://info.slsbearings.com.sg/sls-blog-subscription) if you would like to receive the latest posts about Inventory Planning and Optimisation.
## Interested to Learn More About Inventory Optimisation?
Let us help reach your inventory planning goals to get the right stock at the right place and at the right time. To learn more, please visit [https://www.slimstock.com/sg/](https://www.slimstock.com/sg/) for more information or contact Erik at [e.dewitte@slimstock.com](mailto:e.dewitte@slimstock.com).
*Headquartered in The Netherlands, Slimstock is the leading inventory optimization specialist globally since 1993 and entered the South East Asia market in 2016. Supporting over 1000 companies across a diverse range of industries, covering large, medium and small enterprises, Slimstock's forecasting and demand planning solution (Slim4) is designed to ensure companies get the right stock at the right place and at the right time. It also helps companies strike a balance between working capital, operational costs and the optimal service level.*
by [Slimstock](https://blog.slsbearings.com/author/slimstock) on February 11, 2020
categories: [Service](https://blog.slsbearings.com/topic/service)
[0 Comments](https://blog.slsbearings.com/strategies-to-operations-series-1-assortment-index#comments-listing)
### Share this:
### Written by [Slimstock](https://blog.slsbearings.com/author/slimstock)
[Failure Analysis Case Studies](https://blog.slsbearings.com/sls-failure-analysis-case-studies)
In [Service](https://blog.slsbearings.com/topic/service)
[4 Key Questions to Ask Before Getting Started With Collaborative Robots](https://blog.slsbearings.com/4-key-questions-to-ask-before-getting-started-with-collaborative-robots)
In [Service](https://blog.slsbearings.com/topic/service)
[Predictive Maintenance Program To Prolong Electric Motor Lifespan And Prevent Failure](https://blog.slsbearings.com/predictive-maintenance-program-to-prolong-electric-motor-lifespan-and-prevent-failure)
In [Predictive Maintenance](https://blog.slsbearings.com/topic/predictive-maintenance)
### Categories
- [Product- Non-Bearings (35)](https://blog.slsbearings.com/topic/product-non-bearings)
- [Product- Bearings (33)](https://blog.slsbearings.com/topic/product-bearings)
- [Service (15)](https://blog.slsbearings.com/topic/service)
- [News and Events (14)](https://blog.slsbearings.com/topic/news-and-events)
- [Bearing Maintenance (10)](https://blog.slsbearings.com/topic/bearing-maintenance)
- [Sabrina's Journal (6)](https://blog.slsbearings.com/topic/sabrinas-journal)
- [Success Stories (6)](https://blog.slsbearings.com/topic/success-stories)
- [Industry (5)](https://blog.slsbearings.com/topic/industry)
### Top Posts & Pages
### Social
-
-
-
-
### Subscribe to the SLS Blog via email
Want to increase your machinery life and minimise downtime? Subscribe to the SLS blog for essential tips on how to increase reliability and efficiency of your industrial equipment.
Join 637 other followers
© 2018 SLS Bearings (S) Pte Ltd All Rights Reserved.
- [**](https://www.facebook.com/SLSBearings/)
- [**](https://www.youtube.com/c/slsbearingssg)
- [**](https://blog.slsbearings.com.sg/)
- [**](https://www.linkedin.com/company/sls-bearings-s-pte-ltd/)
```json
{
"@context" : "https://schema.org",
"@type" : "BlogPosting",
"author" : {
"@type" : "Person",
"name" : "Slimstock",
"url" : "https://blog.slsbearings.com/author/slimstock"
},
"dateModified" : "2021-08-04T12:41:21.992Z",
"datePublished" : "2020-02-11T01:15:00.000Z",
"headline" : "Strategies to Operations Series 1: Assortment Index",
"image" : [ "https://blog.slsbearings.com/hubfs/Assortment%20Index-1-1.png" ],
"mainEntityOfPage" : {
"@id" : "https://blog.slsbearings.com/strategies-to-operations-series-1-assortment-index",
"@type" : "WebPage"
},
"publisher" : {
"@type" : "Organization",
"logo" : {
"@type" : "ImageObject",
"url" : "https://blog.slsbearings.com/hubfs/SLSBearings_July2019/Image/logo-sls-en.png"
},
"name" : "SLS Bearings (S) Pte Ltd"
}
}
```