Stock Keeping Units (SKU): 100% Great Guide to learn SKU.

What is SKU?

SKU, which stands for Stock Keeping Unit, is a unique identifier assigned to individual products in a company’s inventory. It plays a crucial role in inventory management, allowing businesses to track and manage products efficiently. For manufacturing companies, SKU holds significant importance as it helps streamline operations, enhance inventory control, and optimize overall supply chain management.

SKU Meaning?

An SKU number is a distinct alphanumeric code or barcode assigned to each product variant or item in a company’s inventory. It serves as a digital fingerprint for the product, containing vital information such as product characteristics, size, color, and packaging. The SKU number is used to identify and differentiate similar products, preventing confusion and facilitating accurate inventory tracking.

Each SKU is used to distinguish one product from another based on specific characteristics, such as size, color, style, or packaging. Here are some examples of different SKUs for a hypothetical clothing store:

Stock Keeping Unit Example are as below –

Few of these SKU examples are based on the Business type like Shoes or Textile etc. Due to this the additional parameter to capture and mange SKU is different.

1. AB12345 Product: Men’s T-Shirt Description: Black, Size: Medium, Round Neck
2. CD67890 Product: Women’s Dress Description: Blue Floral Print, Size: Small, Sleeveless
3. EF24680 Product: Kids’ Shoes Description: Red, Size: 5, Velcro Closure
4. GH13579 Product: Unisex Hoodie Description: Gray, Size: Large, Pullover Style
5. IJ97531 Product: Women’s Handbag Description: Brown Leather, Crossbody, Medium Size

Each Part ID has its own recognition way to control the behaviour across the company.

As an extension to get the control, we add more parameters to the SKU.

1. Normal SKU codes
2. SKU with Batches – Typically a SAME SKU Code with different BATCH NOs to identify the stock details.
3. SKU with serial Nos – Products that  have their own Serial Nos. Example – TVs, Mobile etc.

What are the Benefits of Using SKU in Inventory Management?

Implementing SKU in inventory management offers a range of benefits for manufacturing companies, including:

• Streamlined Tracking: SKU enables businesses to precisely monitor product movements and quantities, providing real-time visibility into inventory levels.
• Efficient Reordering: SKU simplifies the reordering process by automating inventory replenishment based on predefined thresholds, ensuring products are always available when needed.
• Inventory Accuracy: With SKU, manufacturers can eliminate manual errors and miscounts, leading to improved inventory accuracy and reduced risk of stockouts or overstocking.
• Enhanced Productivity: SKU-driven inventory management allows for quicker order fulfillment and reduced lead times, improving overall productivity.
• Data-Driven Decisions: SKU-generated data empowers businesses to make informed decisions regarding sales, production, and marketing strategies.
• Inventory Optimization: By analyzing SKU data, manufacturers can identify slow-moving or obsolete items, enabling better inventory optimization and cost savings.

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What is the Difference Between UPC vs SKU?

The difference between SKU (Stock Keeping Unit) and UPC (Universal Product Code) lies in their purpose, scope, and level of standardization. Both are used for product identification, but they serve distinct functions in inventory management and retail operations. Let’s elaborate on the differences with examples:

SKU (Stock Keeping Unit)

• Purpose: SKU is an internal code used by businesses to uniquely identify and track individual product variants within their inventory management systems. It is specific to each company and allows for a more granular level of product differentiation.
• Scope: SKU numbers can vary widely between different companies or even within the same company for different product lines. They are typically used for internal purposes and are not universally recognized outside the organization.
• Customization: Companies have the flexibility to design their SKU systems based on their specific needs, incorporating relevant product information, such as color, size, style, and packaging.
• Example:
  • Product: Men’s T-Shirt
  • SKU: TSHIRT-BLACK-M

UPC (Universal Product Code):

• Purpose: UPC is a standardized barcode used for point-of-sale scanning and product identification in retail stores. It provides a uniform system for identifying products globally, regardless of the manufacturer or retailer.
• Scope: UPC is universally recognized and can be used across different retailers and locations, ensuring seamless product scanning and inventory management in various stores.
• Standardization: UPC codes follow a specific format regulated by the Global Standards One (GS1) organization. Each UPC code consists of a manufacturer identifier and a product identifier.
• Example:
  • Product: Women’s Dress
  • UPC: 123456789012

Comparison between SKU and UPC

1. Use:
   • SKU is primarily used for internal inventory management purposes and allows companies to track products at a more detailed level, enabling better control and decision-making.
   • UPC, on the other hand, is designed for point-of-sale transactions and external use, facilitating efficient product scanning and pricing in retail environments.
2. Customization vs. Standardization:
   • SKU is customizable and can be tailored to suit the company’s specific product attributes and inventory needs.
   • UPC follows a standardized format, ensuring consistency and universality across different products and retailers.
3. Scope:
   • SKU is limited to a particular organization and is not recognized universally outside the company.
   • UPC is widely accepted and recognized globally, making it a standard for retail and supply chain operations.

In summary, SKU and UPC serve different purposes in the world of inventory management and retail. SKU provides internal product identification and tracking within a company’s inventory system, offering flexibility and customization. On the other hand, UPC is a standardized barcode used for product scanning and identification at the point of sale, ensuring consistency and efficiency in retail operations across different locations and stores.

How SKU Helps to Track Inventory?

SKU plays a pivotal role in inventory tracking by providing a comprehensive and organized system for managing products. The process involves the following steps:

• SKU Assignment: Each product variant is assigned a unique SKU number containing relevant product details.
• Barcode Generation: If applicable, a barcode is generated based on the SKU number, facilitating easy scanning during inventory transactions.
• Inventory Management: SKU data is entered into an inventory management system, allowing businesses to track product quantities, movements, and stock levels accurately.
• Reordering and Restocking: When inventory levels reach predefined thresholds, the SKU system triggers automatic reordering to ensure continuous availability of products.

FAQ’s on SKU

1. What is SKU Number?

What is SKU number, or Stock Keeping Unit number, is a unique alphanumeric code assigned to a specific product or item in a retailer’s inventory. It serves as an identifier that helps businesses track and manage their inventory efficiently. Each SKU represents a distinct product variant, such as different sizes, colors, or configurations of the same base product.

An SKU number typically contains information such as manufacturer, product type, attributes, and sometimes location details. It plays a crucial role in inventory management, order fulfillment, and accurate tracking of sales and stock levels.

2. What is Stock Keeping Unit (SKU)?

A Stock Keeping Unit (SKU) is a unique identifier used in inventory management to differentiate and track individual items or products. SKUs are assigned to specific product variations, helping businesses manage their inventory more effectively by accurately monitoring the movement and availability of different items.

SKUs can include information like product attributes (size, color, style), supplier details, and other relevant identifiers. By utilizing SKUs, businesses can streamline their inventory control, improve order processing, and enhance their overall supply chain management.

3. Is the SKU the Same as a Serial Number?

No, an SKU is not the same as a serial number. An SKU is a unique identifier used to differentiate and track different product variants within a retailer’s inventory. It is primarily used for inventory management purposes.

On the other hand, a serial number is a unique number or code assigned to an individual product or item for the purpose of identification. Serial numbers are typically used to track the specific unit or device itself, enabling manufacturers and consumers to distinguish between individual items.

4. Is SKU the Same as a Barcode?

No, an SKU is not the same as a barcode. An SKU is a unique alphanumeric code assigned to a specific product variant for inventory tracking and management. It helps businesses internally organize and manage their inventory.

A barcode, on the other hand, is a machine-readable representation of data, often including the SKU, that is used for automated identification and data capture purposes. Barcodes are printed on product packaging and can be scanned to quickly retrieve information about the product, including the SKU.

5. Difference between Serial Number vs SKU?

A serial number is a unique identifier assigned to an individual product unit, allowing manufacturers and consumers to distinguish between specific items. Serial numbers are often used for warranty tracking, recalls, and individual item traceability.

An SKU, on the other hand, is a unique identifier assigned to a specific product variant within a retailer’s inventory. SKUs are used for inventory management, order fulfillment, and tracking different variations of a product.

In summary, while both serial numbers and SKUs are unique identifiers, serial numbers focus on individual units, while SKUs focus on product variations within inventory management.

6. What is UPC/SKU Meaning?

UPC stands for Universal Product Code, and SKU stands for Stock Keeping Unit. A UPC is a standardized barcode used for identifying and tracking products in a retail environment. It is often printed on product packaging and can be scanned at the point of sale to retrieve product information and pricing.

An SKU, as mentioned earlier, is a unique code used by retailers to manage and track their inventory. While both UPCs and SKUs serve identification purposes, they have different applications: UPCs are primarily used for point of sale scanning, and SKUs are used for internal inventory management.

7. Difference between UPC and SKU?

UPC (Universal Product Code) and SKU (Stock Keeping Unit) are both identification codes used in retail, but they serve different purposes. UPCs are standardized barcodes used for point of sale scanning and inventory tracking across different retailers. They provide a unique code for each product and its manufacturer.

SKUs, on the other hand, are unique codes used by individual retailers to manage and track their inventory internally. SKUs often include more detailed information about product variations, such as size, color, and style.

While both UPCs and SKUs play crucial roles in inventory management, UPCs are more standardized and widely recognized across various retailers, whereas SKUs are tailored to each retailer’s specific needs.

8. How to Make a SKU Number?

Creating an SKU number involves a structured approach to ensure uniqueness and effective inventory management. Here’s a general guideline for making an SKU number:

1. Identify Product Attributes: Determine the key attributes of the product, such as size, color, style, and any other relevant variations.
2. Decide on Format: Choose a format for your SKU, such as a combination of letters, numbers, and symbols. For example, you might use the first few letters of the product name followed by a unique identifier.
3. Assign Codes: Assign codes to represent each attribute. For instance, if “Blue” is one attribute, you could assign it the code “BL.” Similarly, “Large” could be assigned “LG.”
4. Combine Attributes: Combine the attribute codes to create the SKU. For example, a blue, large t-shirt might have an SKU like “BL-LG-TSHRT.”
5. Ensure Uniqueness: Ensure that each SKU is unique within your inventory. You can use a sequential number or add more attributes if needed.
6. Test and Implement: Test the SKU system and ensure it works seamlessly with your inventory management software or processes.

Creating a well-structured and unique SKU system helps streamline inventory tracking and management, making it easier to identify and manage different product variations.

9. What is SKU in Inventory?

In inventory management, an SKU (Stock Keeping Unit) is a unique identifier assigned to a specific product variation or item. It allows businesses to track and manage inventory more effectively by distinguishing between different product versions, such as size, color, or style variations of the same base product.

SKUs play a crucial role in maintaining accurate inventory records, optimizing order fulfillment, and ensuring that the right products are available at the right time. They enable businesses to streamline their inventory processes, prevent stockouts, and enhance overall supply chain efficiency. SKUs are often used in conjunction with barcodes for easy scanning and data retrieval during inventory transactions.

SKU (Stock Keeping Unit) serves as a vital tool for manufacturing companies to streamline inventory management and optimize supply chain operations. With unique SKU numbers, businesses can accurately track and control their inventory, enhance efficiency, and make informed decisions. By leveraging the power of SKU-driven inventory management, manufacturing companies can unlock efficiency, improve customer service, and drive business growth in a highly competitive marketplace.

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