There are two standard answers to the long tail question, and they point in opposite directions. The first says cut it: most of your volume comes from a small share of your products, so the tail is complexity without a payoff. The second says keep it, and it usually leans on the long tail argument popularized by Wired’s Chris Anderson in the mid-2000s, that a great many low-demand items can add up to a market as large as the hits.
Both answers are wrong for most manufacturers, and for the same reason. They treat the tail as one thing. The tail is actually four different kinds of product that happen to share a low position on a volume report, and each kind calls for a different decision. If you are working on the whole product line rather than the tail alone, the full method is in the pillar guide on how to cut a product line without losing revenue.
Why are both standard answers wrong?
Because the cut-it answer ignores what tail products do for the rest of the line, and the keep-it answer ignores what they cost. Each camp has noticed one true thing and built a policy on it.
The keep-it argument was built for digital distribution, where one more title in a catalog costs almost nothing to carry. A plant is close to the opposite. Economics that make the long tail attractive in digital retail are exactly the ones a plant does not have, because every tail SKU carries changeovers, safety stock, planning time, and document upkeep that are fixed per SKU rather than per unit. The mechanics of that are laid out in what a SKU actually costs, and they are why a tail that looks harmless on a sales report can be expensive on the floor.
Economics that make the long tail attractive in digital retail are exactly the ones a plant does not have. Every tail SKU carries costs that are fixed per SKU.
The cut-it argument has the opposite blind spot. A volume ranking describes how much of each product you sell. It says nothing about the role the product plays, and a product can sell very little while doing something the rest of the line depends on. Neither camp asks the only question that settles the matter for a specific product: what job is it doing?
What are the four kinds of tail SKU?
Basket completers, obligations, starved products, and orphans. Only the last kind should be cut outright; the other three need managing, and managing them well is most of the value in getting this right.
A basket completer sells little but is bought by customers who matter, often as one item among dozens they buy from you. Remove it and you risk the basket. An obligation is a product you have committed to supply, such as a service part, a regulated item, or a line under contract, and its low volume is irrelevant to whether you can stop. A starved product sells little because nobody has invested in it for years, which makes it look identical on a report to a product nobody wants. An orphan has no customer who depends on it, no obligation attached, and no evidence that investment would change anything.
Most arguments about the tail are between people looking at different kinds and generalizing. The salesperson defending the tail is usually thinking of a basket completer. The plant manager attacking it is usually thinking of an orphan. Both are right about the product in front of them and wrong about the tail as a whole.
How do you manage the completers and the obligations?
Keep them, but stop treating them as normal products. Price them for the service they provide, take them off your constraint where you can, and set terms that make their cost visible to the people who buy them.
For basket completers, the natural move is make-to-order with an agreed lead time, so the product stops interrupting the schedule for everything else. Price it with the whole customer relationship in view rather than as a standalone item, and review it with the customer rather than behind their back. A top customer told plainly that a part costs more to make than it sells for will often help you fix that. One who finds out when the part disappears will not.
Obligations are better thought of as a service business than a product line. A service part priced like a production part is a subsidy nobody agreed to. Price obligations for the availability they provide, not the material they contain. Consolidate duplicate spares where the engineering allows, buy components for end-of-life parts in a last-time purchase, and put a defined duration on every new supply commitment so today’s contract does not become the obligation somebody else inherits in fifteen years.
A service part priced like a production part is a subsidy nobody agreed to. Price obligations for the availability they provide, not the material they contain.
Is the product weak, or has it been starved?
Test that before you cut, because a product that sells little because nobody has invested in it looks exactly like one that sells little because nobody wants it.
Early in my time at Whirlpool I took over waste disposers and value dishwashers, a business of about $100 million that most ambitious people in the company regarded as a place careers went to stall. Working with the OEM suppliers to rebuild how the premium disposers were marketed, the premium waste management business grew 60 percent and added accounts including IKEA and HH Gregg. It was not a tail in the catalog sense, but it shared the property that matters here: low attention had been mistaken for low potential, and the numbers had been read as a verdict on the product when they were really a record of neglect.
Low attention and low potential look identical on a volume report. The only way to tell them apart is a bounded investment with a date on it. Pick one lever, a marketing push, a channel, a price point, a single account, give it a quarter, and decide in advance what result would count as proof. If customers respond, the product was starved and belongs in the funding conversation. If they do not, you have converted a starved product into an orphan with evidence, and the next decision is easy.
Low attention and low potential look identical on a volume report. The only way to tell them apart is a bounded investment with a date on it.
What should happen to the orphans?
Cut them, on a schedule, with a last-time buy. An orphan has no customer depending on it, no obligation attached, and no case that investment would change its position, so the only argument left for keeping it is that removing it takes effort.
If you have more orphans than you can retire at once, decide the order with the kill screen in how to identify which SKUs to kill, which ranks them by what they earn per hour of your constraint. Start with the ones that take the most constraint time for the least contribution, because those are the ones actively displacing better work.
Then stop making new ones. Most orphans started life as a special for one customer or a launch that never ramped. Put an expiry date on every special and a ramp deadline on every launch, and the orphan list stops refilling itself between reviews.
How do you sort your own tail?
In five passes, in this order, because each pass removes products from the pool the next one looks at.
- Define the tail. Take the bottom fifth of SKUs by volume for one product family, or whatever cut line your business already uses.
- Mark the basket completers. Any tail SKU bought in the last year by a customer in your top 20 percent by profit contribution.
- Mark the obligations. Service and spare parts, regulated items, and anything under a supply contract, each with the date the obligation ends.
- Mark the starved products. Tail SKUs in a segment where customers can name an advantage for buying from you but the product has had no investment in years.
- Treat everything left as an orphan. Run the orphans through the kill screen and retire them in order.
Do not be surprised if the orphan list is much shorter than the cut list you started with. The difference is the set of products that were doing a job the volume report could not see, and finding that set is the reason to sort the tail at all.
What to do Monday morning: take the bottom fifth of one product family by volume and mark every SKU a top-twenty customer bought last year. Whatever is marked is not on your cut list.
About the Stagnation Assassin
Todd Hagopian is a Fortune 500 transformation executive who has generated $3B in shareholder value across Berkshire Hathaway, Illinois Tool Works, Whirlpool, and JBT Marel, where he serves as Global VP of Product Strategy and Marketing. Known as The Stagnation Assassin, he is the author of two published books: The Unfair Advantage: Weaponizing the Hypomanic Toolbox and Stagnation Assassin: The Anti-Consultant Manifesto. His blog is published in 15+ languages and read by operators worldwide. Bring him to your stage via his speaking page or connect with him on LinkedIn.
If most of your tail turns out to be starved rather than weak, the real question is why nobody invested. Request free Stagnation Genome scoring for your business and I will tell you whether the neglect is confined to the product line or runs deeper.
See also: How to Identify Which SKUs to Kill