What are Stock Keeping Units (SKUs) and What is it for?

It’s difficult enough to run a business, but losing track of your items is like losing your TV remote on the sofa. Businesses can easily handle inventory turmoil with the help of the Stock Keeping Unit (SKU), a straightforward yet effective instrument. Consider SKUs your company’s personal helper that keeps track of every product, so you don’t have to.

In addition to simply identifying things, these smart codes also increase sales efficiency, organize inventories, and expedite inventory tracking. A strong SKU system gives you greater control, reduces headaches, and improves your understanding of how well your company is performing.

Continue reading this article as we explore stock-keeping units, examples, how to create them, and how they can benefit your business.

What is a Stock Keeping Unit (SKU)?

Businesses use a special code called a Stock Keeping Unit (SKU) to identify and monitor every product code in their inventory. SKUs are usually alphanumeric combinations that stand for particular attributes of a product tracking code, like its category, size, colour, and brand. For instance, a retail establishment might assign a blue medium-sized shirt the SKU “SHRT-BLU-M.”

SKUs are important because they make it simple for companies to monitor inventory levels, sales trends, and restocking requirements. Many businesses use inventory management software to automatically issue and track SKUs within a structured framework to ensure these numbers are used uniformly throughout activities.

The Importance of SKU in Inventory Management

SKUs are essential inventory identifiers because they make tracking and arranging things precisely possible. Businesses can better organize their inventory by classifying products according to factors like kind, size, and colour by giving each item a unique SKU.

SKUs give businesses information about reorder points, track inventory movement, and demonstrate what they have in stock. When getting ready for holidays or sales, vendors might use SKU data to determine what they should replenish. SKUs provide information that lets businesses know where a particular item is in the shipping process.

How are SKUs Created?

Developing successful SKUs necessitates adhering to rules that guarantee scalability, uniformity, and clarity. Companies should concentrate on creating SKU identifiers that are brief—typically 8–12 characters—and sufficiently informative to communicate important product information. For instance, a store might use “JKT-BLK-L” for a large black jacket.

When product catalogues grow, manually managing SKUs can become too much to handle. By automating SKU creation, inventory management software provides an effective solution. Businesses can swiftly establish consistent SKUs by using predefined templates that are based on variables like size, colour, or kind.

Where are SKUs Used?

Various businesses frequently use SKUs because they make it simple for employees to find products and monitor stock levels, which helps retailers manage huge inventory. Let’s take a look where SKUs are frequently used in:

• Inventory management systems: SKU numbers are kept in point-of-sale (POS) or inventory management systems, which facilitates tracking every product.
• Warehouse shelving: SKUs are frequently labelled on warehouse shelves to help employees quickly locate products during picking and packing.
• Product listings: SKU numbers are included in product details on e-commerce sites like Amazon and eBay to guarantee customers receive the correct items from the finished goods inventory list.
• Shipping labels: SKU numbers are frequently printed on shipping labels from companies to facilitate product tracking and identification during delivery.
• Delivery notes: To guarantee precise order fulfilment, SKUs are frequently mentioned on delivery notes as a clear reference to the supplied product.
• Price tags: Retailers frequently use SKU numbers on price tags to help employees locate items in-store and manage inventory effectively.
• Receipts: The SKU number is usually listed on the receipt and the product description when a product is sold.
• Product packaging: SKU numbers are printed by manufacturers on product packaging, usually either directly on the package or on a label.

Regardless of the sector, companies with extensive product catalogues can benefit greatly from the additional accuracy, ease of tracking, and operational efficiency that comes from integrating SKUs with an inventory management system. Check our price scheme for more information on inventory management systems.

SKU vs. UPC: What’s the Difference?

SKUs and UPCs (Universal Product Codes) have different uses. SKUs are separate codes that each company creates to keep track of and arrange its items. For instance, “TSHRT-BLU-M” may be the SKU for a medium blue t-shirt in a clothes retailer. Conversely, UPCs are standardized codes, such as “012345678905,” used to identify products worldwide and are the same for all shops.

The primary distinction is customization: UPCs remain constant regardless of the product’s location of sale, whereas SKUs are customized to match a company’s unique requirements. For example, even if a t-shirt is sold online or in many retail chains, it always has the same UPC, even though it may have the SKU “TSHRT-BLU-M” at one store.

Companies typically utilize UPCs to sell products across several platforms and SKUs for internal tracking. Numerous inventory management systems can manage both, which facilitates product management and organization across various sales channels.

How are SKUs Used in E-Commerce?

SKUs are essential for maintaining the organization of online stores and guaranteeing precise order fulfilment in e-commerce. SKUs manage sales data across platforms, track inventory, and classify products.

For instance, the SKU assists in finding the precise item in the warehouse when a consumer places an order, guaranteeing that the right product is received. Businesses link SKUs to every listing on sites like Shopify and Amazon to monitor inventory and automatically refill when supplies run short.

For e-commerce specialists, SKUs are essential for backend process optimization and go beyond simple identification. High-volume retailers utilize SKUs to help them in reducing fulfillment errors and arranging product variations.

Inventory management software further improves this by automating reorders, syncing SKUs across platforms, and offering real-time data. SKU data is essential to effective scaling and profitability in advanced e-commerce operations, which also uses it to estimate demand, track top sellers, and adjust marketing tactics.

Track SKUs with HashMicro’s Inventory Management Software

For SKU tracking, different codes must be assigned to every product and incorporated into a strong inventory management system. Businesses in Malaysia can streamline this process with HashMicro’s Inventory Management Software, which provides automated SKU creation, real-time stock monitoring, and sophisticated analytics.

Businesses can ensure they never run out of essential commodities by automating reorder procedures and reducing stock count errors with HashMicro’s solution. Here are the key features of HashMicro’s Inventory Management Software:

• Automated SKU generation: Creating and maintaining consistent and simple SKUs for your whole product catalog.
• Real time stock monitoring: Give real-time updates on your stock levels in multiple locations to prevent overstocking and stockouts.
• Comprehensive inventory analytics: Make data-driven evaluation decisions, optimize stock levels, and gather information about inventory patterns.
• Multi-warehouse management: Simplify tracking and managing inventory across different locations.
• Seamless integration with ERP modules: Improved business efficiency by integrating with other business functions, like sales and procurement.

Conclusion

SKUs are a crucial instrument for efficient inventory control in various sectors. SKUs increase organization, streamline tracking, and boost overall business efficiency by giving each product a unique identification.

Implementing a well-structured SKU system, particularly when combined with inventory management software, may greatly increase your operational effectiveness, regardless of the size of your e-commerce platform.

HashMicro gives businesses the tools to streamline their inventory procedures and stay ahead of the competition. Ready to experience the benefits immediately? Try our free demo today and see how HashMicro’s Inventory Management Software can simplify inventory management in your business operation.

FAQ about Stock Keeping Unit

• What is the difference between SKU and inventory?

  When a business records the inventory of its stock, it counts the quantity it has of each unit, or SKU. SKU can also refer to a unique identifier or code, sometimes represented via a barcode for scanning and tracking, which refers to the particular stock keeping unit.

• What is the unit of measure stock keeping?

  A stock-keeping unit (SKU) is a unique code assigned to a product by a business. SKU systems are typically used internally and can vary from one business to another, even if both are selling the same product.

• Can SKU and barcode be the same?

  Barcode is a tool that supplements or “rephrases” a SKU or UPC number, representing it in a visual, scannable format. SKUs can have barcodes associated with them, but they are not a requirement.