What is a SKU?
A Stock Keeping Unit (SKU) is a unique, alphanumeric code, that a seller assigns to every type of item it sells. SKUs would be created internally by sellers to identify, receive and locate their product inventory/stock and it is typically best practise for business to assign unique SKUs to each one of their products.
SKUs are an important tool for every seller to use. Assigning a stock keeping unit code to each of your products is the baseline of any good inventory management strategy and with the aid of SKU, this will assist you with keeping up with stock demand, tackle loss prevention and ultimately support you business's sales.
Where are SKUs used?
You will typically find SKUs are used in:
- Warehouses
- Retail stores
- Catalogues
- Online stores
- Product fulfilment centres
Why are SKUs important?
The purpose of using SKUs is to help businesses more accurately and easily account for every all inventory, in any location that this may be stored. This becomes increasingly important to manage when stock is located across multiple locations.
Top Tips when creating SKUs
- Create (and stick!) to a robust SKU format and process
- Each SKU should consist of a unique combination of letters and numbers. Typically, those letters and numbers identify product characteristics such as: manufacturer, style, colour, or size
- Simplify your SKUs - it should be easy for sellers and inventory managers to categorize and locate any given product based on its SKU
- Standardise your SKU creation format/process - that way, it’ll be easier to train staff to use them when managing inventory.
- Limit each of your SKUs to no more than 16 characters. If your product variety allows for it, using as few as 4 to 8 characters is ideal for the sake of simplicity. The shorter your SKUs are, the more easily they can be understood by you and your staff
- Try using hyphens between each descriptive section of a SKU to make it more easily readable
What is the difference between SKUs and Model Numbers?
Model numbers are distinct from SKUs. Each unique model number is generated by the product’s manufacturer and is not something a retailer can alter.
Model numbers are visible and useful to your customers - a product’s model number is the same regardless of where you’ve purchased that product and it’s useful to know the product’s model number if issues ever arise that need manufacturer support.
What is the difference between SKUs and Serial Numbers?
Unlike model numbers, each serial number is unique to each individual type of product, not shared with any other products in their model or elsewhere. Serial numbers are typically reserved for consumer electronics products, such as mobile phones, game consoles, and kitchen appliances, for example
Serial numbers are customer-facing, meaning they’re accessible for customers to locate and identify. For example, it’s common for manufacturers to request a customer’s product’s serial number in order to process a return or repair.
What is the difference between SKUs and Barcodes?
A barcode is often confused with a SKU, model number, or serial number, but it’s yet another necessary number that each product must be assigned.
Also known as a Universal Product Code, or UPC, a barcode is that set of scannable black bars and numbers. Each UPC is part of a system that’s recognized globally as a way to efficiently move products through the supply chain and point of sales. UPC barcodes are the reason why you can simply use a barcode scanner to return product data, instead of needing to manually enter in product information.
To summarise, a SKU is an internal code that each business can create for its own inventory management, whereas a UPC is the same for a product no matter who sells it.
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