What is an SKU Code?
SKU codes are made up of a particular character and are unique for every piece. The figures vary according to different parts of the product giving a unique identity to it.
The utmost advantage of SKU codes is that they assist organizations to take a more accurate reading of stocks. This not only saves time and money but also provides efficiency in the process.
SKU stands for ‘Stock Keeping Unit’ and is often known as MPN (Manufacturer’s Part Number), barcode, or product code. SKU code is a unique set of numbers and letters that refers to a specific product in an inventory. Think of it as a unique identity or name that is assigned to a stock or a product. It is an alphanumeric string that defines all the details attached to an item such as description, material, color, size, quantity, etc.
SKU code makes it very easy to find a particular product present in an inventory system. With the help of these codes, one can search and identify an item from lists, invoices, orders, etc. It not only saves time but also makes record-keeping easier than before.
SKU code in retail terms
SKU code is a scannable bar code that is printed on a product in a retail store. This alphanumeric combination allows vendors to track the records of inventory and sales. SKU codes refer to a specific stock item in a retailer’s shop. They are specific to the size, color, and shape of the products making it unique regarding your dealings.
Where are SKU codes used?
Today SKU codes are being widely used in Catalogues, E-Retailers, Product fulfillment centers, Retail stores, and Warehouses. Each retailer or company can create a unique SKU code for its products, utilities and services.
How are the SKU codes formed?
It becomes very much necessary to track your inventory and this is achieved by choosing a unique and correct set of SKU codes for your products.
Almost every retailer or a company, be it offline or online, attach a unique SKU to each of its products which have all the categorizing features and attributes of the product.
Each company follows its own unique method of creating SKUs for its products. Here’s what you need to be aware of while creating the SKU code.
- You need to make each SKU unique. Always make sure an SKU is unique in a way and never reuse the SKU code.
- Try to keep them short, distinguishable and less complicated. In some inventory management systems, long and complex SKU codes might not work.
- Don’t confuse a reader with the codes by adding special characters or spaces to your code.
- Avoid using O’s and I’s as they might appear confusing with 0’s and 1’s.
The significant function of the SKU code is effective inventory management as well as time-saving. There is reduction in customer spending time to select items when products have respective separate codes.
Let’s assume that you are selling a blue Polo T-shirt of size 32.
A good SKU code for this T-shirt can be PO-TS-32-BLU.
In this SKU code, PO – represents that the brand of the T-shirt is Polo, TS – represents the type of shirt that is T-shirt; the number represents the shoulder size, that is 32, and BLU – represents the color blue.
Assigning codes to the items require right logic. This helps the retailers in understanding and recognizing their products as soon as one of them comes across the SKU code.
Why is SKU so important?
Stock keeping units are considered to be highly crucial because of its significant use in managing records and inventory. They are generally used by retail stores, storage warehouses, e-retailers, inventories and product service centers. Stock keeping units are useful in a lot of ways for a retailer or a company and have many prime uses. Let’s go through them one by one:
Identifying a single product
With the help of SKUs, you can keep better track of your inventory turnover by product categories.
Settling inventory levels
Another big advantage of SKUs is informal stocktaking. What this does is that it ensures that the product levels in a warehouse match the stock levels that were recorded in the inventory management system. This is why it becomes very important to refer your products with the help of SKU codes.
Identifying reduction in an inventory with the help of SKU codes
Identifying inventory shrinkage is a major aspect of stock level tracking and acts as information as far as inventory management is concerned. This means that it helps to determine the number of items a business couldn’t sell or are missing. Sometimes the items face damage or get lost anywhere along the supply chain due to theft. Meticulous inventory categorization with the help of SKUs minimizes the possibility of theft and enables more transparency throughout the system.
Figuring out the most profitable products
You can track reports that can help determine which product variants doing great and which are under performing. This allows you to know your major profit streams.
SKU codes help in knowing the reorder point for products
Another advantage of SKU codes is that a retailer can keep track of his inventory as well as sales with more detailed and efficient reporting.
Saving customer’s time by helping them find products quickly
SKU codes make the process of inventory management easier and effective. For instance, one can properly track know how many products are available in an inventory and how many aren’t. With the help of inventory management systems such as a cloud inventory management system, product variation can be tracked. Moreover, stock availability becomes very easy to determine, when you associate your products in a warehouse with SKUs.
Difference between SKU Codes and UPC Barcode
Significant features of a SKU code are:
- Variable in length between 8 and 12 characters
- Usually begins with a letter
- Zeroes are best avoided
- Represents product information
- Unique for each company
Significant features of an UPC code:
- Comprises 12 digits
- Numeric only
- Represents product and manufacturer information
SKU codes are very unique according to individual retailers whereas UPC barcodes have universal acceptance. SKU codes are different for different retailers and companies whereas UPC codes remain constant for a product.
Understanding SKU codes and their usage
These are alphanumeric codes per product, by retailers, so that they can keep a better track of their inventory.
The characters present in an SKU code can show information about a product such as its manufacturer, size, color, cost, the location of its warehouse, etc. SKU codes can vary in length depending on how much information one can get from it, but most SKU codes have 8 to 12 characters. These codes help retailers to determine which products need a restock in the inventory.
Understanding UPC barcodes and their usage
A UPC barcode, short for “Universal Product Code”, is a type of code that helps the retailers to track products. A UPC barcode is a unique 12-digit number that is on a retail product, and can only be detected and read by a barcode scanner. These codes are easily and instantly recognizable.
Originally, they provide aid for grocery stores to manage records efficiently. As per GS1 specifications, the UPC bar-code is mainly help for scanning the trade items. It isn’t mandatory for everyone’s usage but generally most retailers make use of UPC bar-codes for selling their products.
Both, SKU codes and UPC codes help one to manage and track his inventory. It is necessary to understand the difference between both and know their usages.Retailers use these codes all over the world to effectively regulate their records of sales. Both of them have their advantages and disadvantages, but in this growing economy with a vast number of retailers in the market scene, SKU codes stand out and prove beneficial for better inventory management.