If you’ve ever tried to manage inventory, sell products online, or helped run any kind of business, you’ve probably heard of a little acronym called "SKU." SKUs are basically the secret sauce behind smooth inventory management. New to the world of SKUs? Or maybe you're just wondering if you’ve been using them correctly? Whichever it is, this guide is designed to break it all down for you. So, let’s dive into the wonderful world of SKUs — what they are, how to create them, and how to use them like a pro!
SKU stands for Stock Keeping Unit. Essentially, it’s a unique code that businesses use to identify specific products. Think of it as your product’s fingerprint — no two SKUs should be alike.
SKUs are used to track inventory, and make it easier to know what products you have, where they are, and how many are left. They’re especially helpful in environments with tons of similar products and variations, like a clothing store with various sizes and colours, or a food store with similar products in different flavours.
Each SKU is typically made up of a string of numbers and/or letters, and while it may look a little cryptic, it’s actually quite straightforward once you get the hang of it.
SKUs let you quickly figure out what’s in stock, what’s running low, and what needs to be re-ordered quickly and efficiently. This makes many things easier, like customer service. For example, if a customer asks about a specific product, having SKUs makes it easier for your team (or you!) to quickly find it in your inventory. Similarly, you're less likely to get similar products mixed up when you're using a SKU system.
You can also keep track of sales data more easily with SKUs. Have information at your fingertips, like which products are your bestsellers, and spot sales trends over time.
So, how do you create one of these magic inventory codes? Don’t worry—it’s not as complicated as it seems! Here’s a simple step-by-step approach to designing SKUs that will work wonders for your business.
A good SKU should give you all the key details about a product at a glance. The most common pieces of information you might want to include are:
For instance, let’s say you’re a shoe retailer. Your SKU could look something like this:
NIKE-WHT-AF90-10M
What does that mean?
SKUs don’t need to be long or confusing. The trick is coming up with a system that makes sense for your business, and is easy to interpret for you and your team. Consistency is key. If you use “BLK” for black in one SKU, stick to that for all your SKUs. The same goes for sizes, product types, and other details.
This is more of a technical thing, but avoid using spaces or special characters (like @, #, etc.) in your SKUs. Doing so can mess up search systems, cause errors, or make things harder to track across various platforms. Use hyphens or underscores if you need to separate information.
Mixing letters and numbers helps keep SKUs short and makes them easier to scan. You don’t need to use a fancy bar code system for them to work. Letters help you quickly identify key info (like product type or colour), and numbers are great for distinguishing versions or models.
Before you commit to a full SKU system, try it on a few products. Can you easily remember or decipher the them after a few days? Does it make finding and tracking products easier? Adjust as necessary!
Now that you've created your SKUs, let’s talk about how you can use them to make your life easier. The cool thing is, once SKUs are in place, they can work across your whole business and benefit you in so many ways.
This is the big one. When you receive new stock, add the SKU to your inventory system so you can track stock levels, locations, and sales from the get-go. Many inventory management systems allow you to search for products by SKU, meaning you can quickly see what you have in stock, and where it is in your warehouse or store.
If you run an eCommerce site, SKUs are super useful for organising your products online. They help avoid confusion with customers, especially if you have similar items with variations as we mentioned before, and you can easily track which items are selling the most by their SKU.
When you reorder from suppliers, knowing your product’s SKU makes it a breeze to match orders and avoid mix-ups. If you use the same SKU system for your orders, suppliers will love you since it’s super clear to see exactly you need.
SKUs allow you to track specific product variations to see which are your bestsellers. Is the little black dress in medium small flying off the shelves while the extra small lags behind? Information like this can better help you plan future orders by following the money and investing in what's in demand, and generally fine-tuning your inventory levels.
Become a data wizard and use SKUs to help you generate sales reports, spot trends, and make intelligent, data-driven decisions. If a certain SKU is constantly selling out, there's a strong chance that you should stock more. If another SKU is barely moving, maybe it’s time for a sale, or a chance to swap this item out with new inventory to keep things fresh.
SKUs might sound a little technical at first, but they’re really just a handy way to keep your inventory organised and your business running smoothly. By setting up a simple, consistent SKU system, you’ll save yourself loads of time in the long-run, reduce errors, and be better equipped to track your sales and inventory.
Whether you’re just starting out with a handful of products, or managing a massive inventory, SKUs can make a world of difference. So, give it a try, and before you know it, you’ll be an SKU master!
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