Stock keeping units (SKU) numbers help retailers track their products in their inventory system. How to create SKUs for your retail business.
SKU numbers are used to track and identify products. SKUs are used by retailers to retrieve items from stock, organize merchandise and sort products based on factors like price, color and size.
A SKU number? Stock Keeping Units: How to Use Them
Stock keeping units (SKUs) are numbers that retailers use to track their products in the inventory system. How to create SKUs for your retail business.
Learn what SKU numbers are, how to make them, and how you can use SKUs for organizing your inventory.
What does a SKU (stock keeping unit) number mean?
A SKU, or stock-keeping unit, is an alphanumeric number that retailers use to track and identify a product. Each item in a retailer's inventory will be assigned a unique SKU code.
SKUs are usually eight to ten characters long, and they contain strings that represent product features like the item's manufacturer, color and size.
SKUs, unlike other forms of product coding, are created by businesses. SKUs can be tailored to the specific needs of customers and vendors.
SKU number example
This is what a SKU set for products sold by Skincare retailers might look like:
This SKU system identifies SKU9606 the first bottle in the Central Winery Chardonnay stockroom.
Why use SKUs?
SKU numbers allow for accurate and detailed management of inventory. Many retailers use SKUs to prevent stockouts and reduce phantom inventories. They also help predict when new products will be ordered.
If your POS is a POS system, you can analyze sales by SKU to determine which variants of products are the most popular.
SKUs are the only way for retailers to identify specific items or customer orders. This is because no two products will have the same SKU. SKUs can also be used for customer support and service.
How do I create SKU numbers?
Since stock-keeping units (also called SKU architecture) are for internal use only, there are no specific rules to follow when designing an SKU.
By adhering to some conventions, you can keep your SKUs in sync with other companies and their software should you ever need to work with an external fulfillment partner.
How to create your SKU numbers
Automate using IMS or POS
An inventory management system or point-of-sale system is the easiest way to generate SKUs.
These software systems keep track of customer orders as well as the status and location of stockroom items. The majority of these software systems include an automatic SKU feature. This means that each product added to the system is assigned a unique SKU.
Create SKUs manually
A retail store that has a limited product catalogue and turnover may be able create SKUs manually and as needed.
You'll need to create a system that identifies the main features of your product.
- The first part in a SKU is the most general product feature. For example, the product category.
- The SKU characters below represent increasing specific features of a product, such as size, color or brand.
- SKU characters are sequence identifiers, showing how many products you own and in what order they were bought or processed.
Create codes that have a visual meaning—for example, the first few letters in a brand or supplier's name. Your SKUs will be easier to identify and process manually.
Keep your SKU number within 10 characters if you plan to switch to digital tools in the future.
Use SKUs to identify popular product features.
Use SKU numbers to highlight the most popular features of your products. If you are a retailer of clothing, you may notice that some colors, sizes or styles sell more than others. You can track these attributes using SKUs to understand the preferences of your customers better and adjust your inventory accordingly.
By tracking these attributes, you can ensure that your inventory is the right mix to meet customer demands.
How to use SKUs for your retail business
A stock-keeping unit's major retail functions include:
- Calculating reorder points
- Forecasting sales
- Planning product displays
- Upselling, cross-selling and
- Calculating reorder points
You can calculate reorder dates and times by using SKU data. Typically, this occurs when your inventory drops below a certain number. You can predict the right time to place an order by tracking how fast each SKU is selling over a certain period.
SKU management
SKU management is about creating, tracking, and updating SKUs as well as using SKU information to make informed decisions. Consider these four SKU management aspects:
Consistent SKU creation
Assure that all SKUs have the same format and structure. It is important to use a consistent format and structure for all SKUs. This will make it easier to manage and understand.
Regular SKU updates
Your SKUs should change as your product offering changes. Update SKUs if you discontinue products or introduce new features.
SKU tracking
Track SKUs for sales trends and inventory. This will give you valuable insight into what products are doing well and which are not, allowing you to make informed decisions about inventory management.
Using SKU data
SKU data can be used to inform business decisions. You could, for example, use SKU data to decide which products to discount or promote or to calculate reorder levels and avoid stockouts.
What does SKU mean?
SKU meaning or SKU stands for "Stock Keeping Unit." It is a unique code or number assigned to each product in inventory for tracking purposes.
Comments
0 comment