By late October, the Christmas range is already moving through a beverage operation.

What appeared in the commercial plan as a new label, a limited-edition pack or a customer promotion now has to be sourced, scheduled, produced and shipped. For the Head of Operations or Supply Chain, it shows up as late artwork approvals, short production runs, another supplier to manage and another changeover to fit around the core range.

Commercial sees the additional sales. Operations sees the work required to deliver them. At the same time, the business is asking why costs are not coming down.

This is where operational complexity becomes difficult to manage. It is not one large cost sitting in one budget. It is a collection of smaller consequences spread across different teams, often created by decisions that make sense when viewed from only one function.

Complexity Is Not Spread Evenly

Seasonal and promotional products can create genuine customer value. The difficulty is that their commercial contribution and operational impact are seldom examined together.

A new pack may perform well in the market while adding packaging materials, reducing production-run length and taking capacity away from faster-moving products. None of those effects necessarily looks decisive on its own. Together, they can make a profitable-looking decision far more expensive to execute than the original business case suggested.

Nor is the burden spread evenly. The balance changes by season and customer, which makes a broad, one-off rationalisation too blunt. The useful question is not how many SKUs the business should have, but where complexity is consuming disproportionate capacity and margin—and whether those products create enough value to justify it.

A European bottler provides a useful example. Its still and carbonated portfolio contained 104 active SKUs: 60 core products and 44 seasonal or promotional variants.

Looking at the portfolio as a single rationalisation exercise would have created a large programme with a long delivery timetable. The operational data pointed somewhere more specific. Twelve SKUs—nine Christmas and summer packs and three fast-growing low-sugar variants—accounted for only 9% of volume, yet generated 38% of changeovers, 41% of write-offs and 22% of overtime.

The client concentrated on that cluster. Seasonal packs moved to a shared preform, four shrink-wrap formats became one, and Christmas artwork was given a firm approval deadline. Margin recovered within nine months. A portfolio-wide rationalisation programme that had already been under consideration for 18 months was then shelved.

That distinction matters. The strongest intervention was not the broadest one. It identified where complexity was consuming capacity and margin, dealt with that concentration and retained the products that continued to create value. The remaining trade-offs could then be managed as seasons and customer requirements changed.

When One Function Improves and Another Pays

SKU proliferation is only one way this problem appears. Operational cost can also be created by a change that records a benefit in one function and transfers a larger burden elsewhere.

In another beverage business, Finance simplified return-credit terms to accelerate the recovery of empty bottles. Returns increased by 14%. On Finance’s scorecard, the intervention had worked.

Customer behaviour changed with the new terms. Rather than returning bottles steadily through the month, customers held them and delivered them in a five-day period before the cut-off. The recovery target improved, but reverse-logistics unit cost rose by 23%. Two depots moved to weekend shifts, and each depot required six additional trailer movements per month.

Finance reported a €1.4 million working-capital improvement. Logistics absorbed €2.1 million in unplanned cost. Both figures were correct; neither function’s review showed the full result.

The issue was not poor execution. Finance had improved the measure it owned. Logistics responded to the return pattern created by that decision. The loss appeared in the space between the two.

Why Functional Scorecards Miss the Cost

Most cost programmes are organised by function. Procurement consolidates suppliers or renegotiates terms. Manufacturing pursues efficiency. Supply Chain reduces inventory or reviews the SKU portfolio. Each initiative can achieve its stated target while the consolidated P&L barely moves.

Complexity makes the gap harder to explain. Data is usually structured around functions, budgets and individual KPIs rather than the full operational effect of a decision. Management sees the saving in the team that initiated the change. The extra changeovers, overtime, stock, transport movements or write-offs appear elsewhere, sometimes weeks later.

Planning also becomes less reliable. Demand signals are harder to read when seasonal launches, customer-specific requirements and return patterns keep changing the operating baseline. Teams spend more time reconciling exceptions and less time understanding which decisions are driving them. By the time the effect reaches the P&L, it may no longer be easy to connect it to the original intervention.

This helps explain why another round of supplier negotiations or a broad SKU-reduction programme can disappoint. The individual lever may work exactly as intended. What it does not show is whether total system cost has fallen.

Reduce the Complexity That Is Not Paying Its Way

The answer is not a blanket campaign against SKUs, suppliers or customer requirements. Some complexity earns its place. Some does not. And some is valuable only if the business changes how it is managed.

The first task is to make that distinction using operational as well as commercial evidence. In the bottler case, volume alone would not have exposed the 12-SKU cluster. Changeovers, write-offs and overtime did. In the bottle-return example, the working-capital result had to be considered alongside depot labour and transport activity.

That means assessing an intervention across the customer, commercial, finance, logistics, warehouse and manufacturing system—not stopping at the function that owns the initiative. It also means being selective. A small number of products, customers or operating decisions often accounts for a disproportionate share of the burden.

For Heads of Operations and Supply Chain, much of this is already visible in the working day. They know where schedules repeatedly break, where exceptions consume the team and where an apparently sensible request creates another workaround. What is often missing is the evidence that allows them to take the issue beyond Operations and challenge the underlying decision with Commercial, Finance or the executive team.

At AB Advisors, we help beverage businesses identify where complexity is creating value, where it is merely creating cost and where functional improvements may be shifting cost elsewhere.

If individual initiatives are delivering but unit cost and margin are not moving, get in touch to discuss where the missing cost may be sitting in your operating system.

A saving is only a saving when the whole business costs less to run.