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What is an SKU Number?

What Is An SKU Number?

Stock Keeping Units (SKUs) are unique alphanumeric identifiers assigned to each product variation, forming the foundation of effective inventory control.

SKU Number Example

Let's take a look at a common SKU format: SHRT-BLU-M
  • SHRT: This could represent the product category (shirt)
  • BLU: This could indicate the color (blue)
  • M: This could signify the size (medium)
This is just one example, and the specific format will vary depending on your business needs. However, the core principle remains the same: SKUs provide a concise and informative way to identify and track individual product variations.

Why are SKUs Important?


SKUs are the unsung heroes of retail. These unique product identifiers unlock a treasure trove of benefits that streamline your operations and fuel smarter business decisions.

Benefits of a Robust SKU System


  • Accurate Inventory Control: Say goodbye to stockouts and excess inventory. Real-time data on precise stock levels allows you to optimize ordering, avoid costly mistakes, and keep your customers happy.
  • Data-Driven Insights: Uncover valuable customer trends by analyzing SKU-linked sales data. Identify your top performers, understand buying patterns, and inform strategic decisions across your entire business.
  • Effortless Order Fulfillment: Clear SKU identification eliminates confusion in the warehouse. Picking and packing become seamless, ensuring timely deliveries and a positive customer experience.
  • Enhanced Communication: SKUs act as a universal language within your company. Everyone, from warehouse staff to customer service, can clearly discuss specific products, ensuring everyone is on the same page.

SKU vs. UPC vs. Barcode


SKU, UPC, and barcode – these terms often get tossed around in inventory management. While they all play a role in keeping track of your stock, understanding their differences is essential.

An SKU acts like your own internal code for each product variation. Imagine needing the exact number of medium blue, size 8 T-shirts – your customized SKU system provides this information. Unlike a UPC, which is standardized globally, SKUs are flexible and can be tailored to your specific needs.

On the other hand, a UPC (Universal Product Code) is like a product's passport. This 12-digit code ensures every item has a unique identity throughout the supply chain, regardless of location. From your warehouse to a store across the globe, the UPC facilitates recognition and tracking for everyone involved.

Finally, the barcode is the visual interpreter. These black and white stripes encode the information, allowing scanners to decipher the product's identity quickly. Importantly, both SKUs and UPCs can be embedded within a barcode, enabling efficient scanning for precise tracking.

So, to keep it simple: SKUs are for your internal inventory, UPCs are for global product identification, and barcodes are the visual representation of the data encoded by either SKUs or UPCs.

Here's a summary table to visualize these differences:

Crafting an Efficient SKU System for Your Business

Choosing the Right Approach
Selecting the ideal method for creating SKUs depends on your business size and inventory complexity. Here's a breakdown of the two main options:

Automated SKU Creation (Recommended)
This is the simplest and most efficient approach for businesses with a large or rapidly growing product catalog. Inventory Management Systems (IMS) or Point-of-Sale (POS) systems offer automated SKU generation. These software solutions:
  • Generate unique SKUs for each product you enter, saving time and minimizing errors.
  • Ensure consistency in SKU format throughout your inventory.
  • Can handle complex numbering schemes for extensive product variations.
Manual SKU Creation (For Small Businesses)
If you have a limited product catalog, creating SKUs manually might be suitable. Here's a step-by-step guide to develop a structured system:

  1. Start with a Category Prefix: Begin your SKU with a short code that identifies the product category. Examples include "APPAREL-MEN" for men's clothing or "ELECTRONICS" for electronics. This helps categorize products at a glance.
  2. Add Descriptive Details: Include details that describe the product, like size ("SM" for small), color ("BLUE"), or material ("COTTON"). This helps in quick identification.
  3. Assign a Unique Identifier: Each SKU needs a unique identifier to differentiate product variations. This can be a sequential number (e.g., "SHIRT-001") or a combination reflecting specific variants (e.g., "TSHIRT-COTTON-BLUE-M").
  4. Keep It Scalable: Design your SKU system to accommodate future product additions without needing a complete overhaul. Consider leaving room for extra characters or using a flexible numbering scheme.

Best Practices for Strong SKUs

Regardless of the creation method, these best practices apply for clear and effective SKUs:
  • 1

    Conciseness is Key:

    Aim for short SKUs (ideally under 10 characters) to minimize errors and ensure compatibility with future software integrations.

  • 2

    Alphanumeric Only:

    Stick to letters and numbers (alphanumeric characters) to avoid compatibility issues with software systems.
  • 3

    Uniqueness Matters:

    Assign a unique SKU to each product variation to ensure accurate data and avoid inventory management headaches.
  • 4

    Clarity Matters:

    Eliminate ambiguous characters ("O" vs. "0", "I" vs. "1"). Consider using visually recognizable codes (e.g., brand initials).
  • 5

    Leading Zeros (Optional):

    Consider using leading zeros for consistent SKU length and improved system recognition, but this isn't always necessary.
  • 6

    Logical Sequencing (Optional):

    The final characters could be a sequential identifier, but prioritize clarity over overly complex numbering systems.
  • 7

    Categorize for Efficiency:

    Start your SKU with the most relevant category for your business (e.g., brand, type, model) for quick identification.
  • 8

    Standardization is Crucial:

    Establish a consistent format for all your SKUs to simplify management, training, and data analysis.
  • 9

    Adapt and Evolve:

    Regularly review and update your SKU system as your product
Stop SKU Struggles: Powerful Solutions for Streamlined Inventory Management
Is inefficient SKU management hindering your business growth? You're not alone. But there's a better way.

The Sourcing Co. empowers businesses of all sizes to unlock the full potential of SKUs with our comprehensive suite of tools and expert services.

  • Unleash the Power of Your SKUs
    • Effortless Integration: Seamlessly connect your SKU system to your existing inventory software, creating a unified and efficient workflow.
    • Data-Driven Decisions: Gain actionable insights through customizable analytics and reporting, allowing you to make informed decisions based on real data.
    • Expert Guidance: Our team of SKU strategists provides personalized guidance to tailor your SKU strategy for maximum efficiency and control.
  • Benefits You Can Expect
    • Complete Inventory Control: Gain complete visibility and control over your inventory with optimized SKUs.
    • Streamlined Operations: Eliminate bottlenecks and inefficiencies by streamlining your SKU management processes.
    • Boosted Bottom Line: Improved inventory management translates to reduced costs and increased profitability.
  • The Sourcing Co. Advantage
    Whether you're a small business starting from scratch or a larger enterprise seeking optimization, we have the expertise to meet your unique needs.
    Our team works closely with you to develop a personalized SKU management plan that maximizes the power of SKUs for your specific business.
    Beyond SKUs, we offer a comprehensive suite of services to empower your entire supply chain, including:

    • Product Sourcing and Manufacturing: We help you source high-quality products at competitive prices, and manage the manufacturing process to ensure quality and timely delivery.
    • Supply Chain Management: Gain complete visibility and control over your supply chain, from sourcing to delivery, to optimize efficiency and minimize risk.
    • Logistics Management: Our team of experts can handle all aspects of your logistics needs, from warehousing and transportation to order fulfillment.
    • Selective Distribution: We help you develop a targeted distribution strategy to reach the right customers at the right time.
    • Warehouse Management Guide: Leverage our expertise to optimize your warehouse operations with best practices and efficient processes.
Ready to Take Control?
Contact us today and let's discuss how we can help you streamline your inventory management, optimize your supply chain, and achieve your business goals.
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