• Evaluating productivity from seasoning SKU rationalization efforts, which involve shifting volume from low-efficiency, low-volume SKUs to higher-efficiency, high-volume SKUs. These changes result in a lower blended cost. 

There is a difference in interpretation across sectors: 

• APAC typically does not classify mix shift savings as GP productivity, unless there is a confirmed change in base ingredients or supplier discounts due to volume leverage. 
• PBNA, on the other hand, does classify these savings as productivity, using weighted average. 

• Should mix-driven cost savings from SKU rationalization be consistently classified as GP productivity across sectors, and if so, what framework or criteria should be used to ensure alignment?

• SKU rationalization is generally driven by finished goods SKUs rationalization. If the cost goes down because of Finished Goods SKU rationalization, it cannot be counted as productivity. 
• However, if Procurement initiates an idea which is designed to rationalize a specific raw/packing material SKU or change the mix or supplier, this can be counted as Productivity.
• PBNA approach of using weighted average to calculate productivity is not dependent on any event/initiative, therefore, the result may be driven by a completely unrelated activity i.e. supplier mix change, commodity price reduction, one-off in current or PY, etc. therefore it shouldn't be counted as Productivity. 

Governance

• The benefit is traceable and measurable. Use change in weighted avg cost vs PY to calculate the savings. 
• Align Productivity recognition with the other functions upfront to avoid any disagreement or any duplication.
• TCO approach should be adopted, and negative impact should be recorded as well.