Stock Keeping Unit (SKU) in inventory management.

A SKU is a unique code assigned to a product by a business to track inventory. It is a sequence of numbers and characters used as an internal tracking tool by businesses to track inventory. SKUs play a key role in improving inventory tracking, financial analysis and the efficiency of business operations.

SKUs are codes that businesses create out of letters and numbers that represent detailed information about a product, and they’re established by each business. The alphanumeric code could indicate an item’s color, style, size, brand, manufacturer, packaging or even price. The company decides what information each SKU (Stock Keeping Unit) represents. Businesses often tie their SKUs to Universal Product Code (UPC) barcodes, which make products scannable for inventory and shipment tracking as well as faster checkout.

SKUs are typically used internally and can vary from one business to another, even if both are selling the same product. Because businesses create their own individual SKUs, they are unique to each product and each company. Because SKUs are an internal tool, there are no official rules on how to develop or use them. However, you can learn from the best practices of industry leaders who have well-designed SKU systems that maximize efficiency and include all the key product data.

Nearly any business that holds and sells inventory could benefit from a SKU system. SKU (Stock Keeping Units) management is a subset of inventory management that helps to identify, track, and categorize sellable inventory using a unique alphanumeric code. SKU management helps businesses keep their inventory organized, as all information regarding a specific product can be pulled up quickly (such as how many units are in stock).

What SKU Means?

SKU Means Stock Keeping Unit. A SKU is a unique code assigned to a product by a business to track inventory. It is a sequence of numbers and characters used as an internal tracking tool by businesses to track inventory. SKUs play a key role in improving inventory tracking, financial analysis and the efficiency of business operations. Nearly any business that holds and sells inventory could benefit from a SKU system.

What are some best practices for creating SKUs?

Here are some best practices for creating SKUs:

1. Standardize your SKUs with a simple framework: Having a standardized method or naming convention for managing SKUs can help you keep track of your inventory more easily. You can use a simple framework that includes the product type, size, color, or brand in the SKU.
2. Set SKU-specific reorder points: Some items sell faster than others, so it wouldn’t make sense to order the same amount of each item. Setting SKU-specific reorder points can help you avoid stockouts and overstocking.
3. Group SKUs by category: Grouping SKUs by category can help you organize your inventory and make it easier to find specific items. For example, you could group all your t-shirts together and all your pants together.
4. Keep SKUs unique: Each SKU should be unique to a specific product and should not be used for any other product. This will help you avoid confusion and ensure that you can easily track your inventory.
5. Use a logical order: Arrange the attributes in a logical order. For example, you could start with the product type, then the brand, then the size, and finally the color.
6. Make SKUs easy to read and understand: Keep your SKUs simple and easy to read. Avoid using confusing letters, numbers, and special characters. The best SKUs are between 8-12 characters, and definitely under 16.
7. Use a barcode system: Barcodes can help you scan products quickly and accurately, which can save you time and reduce errors. You can use a barcode system to link your SKUs to your products.

What are some common mistakes to avoid when creating SKUs?

Here are some common mistakes to avoid when creating SKUs:

1. Using manufacturer part numbers: Manufacturer part numbers are not unique to your store and may change over time. It’s best to create your own unique SKUs.
2. Including special characters or spaces: Special characters and spaces can cause issues with your inventory management system. It’s best to stick to alphanumeric characters.
3. Using ambiguous characters: Characters that can be confused with others, such as ‘O’ and ‘0’, or ‘I’ and ‘1’, should be avoided to prevent confusion.
4. Using too many digits or characters: Using too many digits or characters in your SKUs can make them harder to read and sort. Stick to a simple, concise format for your SKUs.
5. Failing to update SKUs when product attributes change: If you change the color of a product, you need to update the SKU to reflect this change. Failing to do so can lead to confusion and errors.
6. Being inconsistent with your SKU naming format: Being inconsistent with your SKU naming format can make it difficult to track products accurately. Make sure you have a standardized method or naming convention for managing SKUs.
7. Duplicating SKUs: Each SKU should be unique to a specific product and should not be used for any other product. Assigning duplicate SKUs to multiple products makes it impossible to accurately track inventory levels.

In conclusion, a SKU is a unique code assigned to a product by a business to track inventory. It is a sequence of numbers and characters used as an internal tracking tool by businesses to track inventory. Stock Keeping Units play a key role in improving inventory tracking, financial analysis and the efficiency of business operations. Nearly any business that holds and sells inventory could benefit from a SKU system. When creating SKUs, it is important to standardize your SKUs with a simple framework, set SKU-specific reorder points, group SKUs by category, keep SKUs unique, use a logical order, make SKUs easy to read and understand, and use a barcode system. Common mistakes to avoid when creating SKUs include using private label manufacturer part numbers, including special characters or spaces, using ambiguous characters, using too many digits or characters, failing to update SKUs when product attributes change, being inconsistent with your SKU naming format, and duplicating SKUs. By following these best practices and avoiding common mistakes, businesses can create an effective SKU system that helps them manage their inventory more efficiently.