A Stock Keeping Unit (SKU) is like a unique ID code assigned to each item or product. It’s a special identifier used by businesses to track goods—whether they’re selling or buying. SKU plays a crucial role in inventory management and product organization. Stock management is essential for both marketing and sales, no matter your business size—especially in the F&B industry.
This article will walk you through what an SKU is, the different types, its benefits, and how to create one. Let’s dive in!
What Is a Stock Keeping Unit (SKU)?
A Stock Keeping Unit (SKU) is a unique alphanumeric code used in inventory systems to identify and track specific products. SKUs are used by all kinds of businesses—from small retailers to large enterprises.
The main purpose of an SKU is to help businesses monitor and manage their stock more efficiently. It prevents confusion in product identification and enhances overall inventory control.
Types of Stock Keeping Units
Understanding the different types of SKUs can help business owners organize their inventory better. SKUs are typically categorized by:
1. Based on Product Type
SKUs can be sorted by product categories—such as electronics, clothing, or food. This makes it easier to group and manage similar items.
2. For Intangible Products
Some businesses also assign SKUs to intangible products like services or software licenses. While the structure differs from physical product SKUs, they’re still useful for tracking and management.
When creating SKUs, simplicity is key. A typical SKU includes 8 or more alphanumeric characters. These characters can represent pricing, product details, or manufacturer info. Keeping it simple makes managing inventory much easier for your team.
Key Functions of a Stock Keeping Unit
SKUs serve several important purposes that benefit both inventory control and sales operations:
1. Product Identification
Each SKU uniquely identifies a product. This makes it easier to distinguish between similar items and organize them accurately.
2. Stock Management
With SKUs, businesses can accurately track available stock, sales volume, and reordering needs. This helps prevent overstocking or stockouts.
3. Sales Monitoring
SKUs allow businesses to monitor which products are selling well and which aren’t. This helps refine sales strategies and focus on top-performing products.
4. Order Management
SKUs streamline the order process. When a customer places an order, the system identifies the product using the SKU—making it easy to check availability, prepare shipments, and fulfill orders efficiently.
Read also: 15 Common Inventory Management Methods
How to Create a Stock Keeping Unit
Here are some practical tips for creating SKUs that suit your business:
- Set Clear Guidelines: Define a format and rules for your SKU codes to keep them consistent across all products.
- Stay Consistent: Maintain a uniform structure and include relevant product info in each SKU for better inventory organization.
- Tailor to Your Needs: Customize your SKUs based on your product range—add size, color, or category identifiers if needed.
- Keep It Simple: Use short, memorable codes that are easy for staff to identify and process quickly.
- Test and Adjust: Try out your SKU system and tweak it as needed to keep things efficient.
By following these tips, you can build an SKU system that helps you manage your inventory more effectively.
Examples of SKU Codes
Here are some sample SKU formats to inspire your own:
1. SKU: BRW-LAR-B678-HNM
- BRW: Product color (Brown)
- LAR: Product size (Large)
- B678: Manufacturer code
- HNM: Brand name
2. SKU: OPT-KCMT-ANK-HTM-0080
- OPT: Brand name (OPTIMA)
- KCMT: Product type (Eyewear)
- ANK: Specification (Kids)
- HTM: Color (Black)
- 0080: Manufacturer code
You can create SKUs manually or use online SKU generators—both free and paid—like Zoho Inventory, Gorgias, QuickBooks Commerce, Prima Sellers, or barcode software. These tools make the process faster and more organized.
That’s a wrap on everything you need to know about SKUs—from what they are to how to create them. In short, an SKU is a unique identifier for each item you sell, helping you track inventory accurately and efficiently. No more stock mix-ups!
If your business has a wide product range, implementing SKUs is a must. One great way to do this is by using a smart POS app with inventory features—like the Opaper App. With this app, you can categorize items easily (e.g., food or beverages), making inventory management much smoother.
Ready to simplify your inventory? Download the Opaper App today from the Google Play Store or Apple App Store.