Everything You Need to Know About SKUs but Were Too Afraid to Ask

If you begin selling your products through retail or wholesale channels it is in your best interest to create an alphanumeric Stock Keeping Unit (SKU) system. SKUs are specific product codes (not to be confused with a bar code) that you and others can use to identify and reference stock on hand from lists, invoices and order forms.

Every variation whether it is colour, size or type should have its own unique SKU. It becomes an abbreviation of the product details.

Examples of SKUs

If you are selling cups and they are manufactured in 3 different colours then the SKUs may become

Tea Cup Black, model number 1 = TC01-B
Tea Cup White, model number 1 = TC01-W
Tea Cup Red, model number 1 = TC01-R

You will need to create more complex SKUs dependent on the number of details of the product. If you are selling clothing this will include styles and sizes.

Spring 2017, Black Jeans, Straight Leg, Waist 36 = Sp17-JN-SL-36-BK
Spring 2017, Blue Jeans, Boot Cut, Waist 32 = Sp17-JN-BC-30-BL
Spring 207, Red Jeans, Skinny Fit, Waist 36 = Sp17-JN-SF-36-RD

Why SKUs are Important

  1. They are an industry standard throughout the supply chain.
    SKUs are essential if you wish to function as an omnichannel seller. For example, Amazon will not allow anyone to list a product without a SKU.
  2. They give information quickly.
    SKU codes can describe a product in a simple way that everyone can understand and can be communicated quickly.
  3. SKU codes increase the speed of warehouse processes.
    Products can be found easily as the SKU codes allow you to search, track and find products and check stock levels in your warehouse.
  4. Increase accuracy levels.
    Stocktaking becomes more accurate as you can validate the stock levels you think you have against the SKUs and can see exactly what is missing.
  5. Quality control is increased.
    As everyone within your warehouse is reading SKUs there should be a decrease in errors due to miscommunication. SKUs reduce incorrect products being picked which in turn reduces the number of incorrect orders being sent to customers.

Things to remember

  • Make the SKUs simple and easy to understand.
  • Do not use numbers for colours always use letters that are easily understood.
  • Try to stay away from O as this can easily be mistaken for 0.
  • Do not use the forward slash symbol “/” because if you export the data into Excel it will interpret it as a date.
  • Issues can also arise using symbols < > * also avoid accents.
  • Substitute any spaces with either _ or – this will give easy to read SKUs.

By using the above pointers you should be able to create your own unique SKU system which will be a good foundation for the future, increase efficiency and allow your business to grow.