What are SKUs and Why Do You Need Them?
SKUs are unique alphanumeric codes used to identify and track individual variations of your products. Think of them as a highly organized system for managing your inventory – far more precise than relying solely on product names or descriptions. Crucially, SKUs aren’t the same as barcodes; barcodes are for scanning, while SKUs provide detailed product information.
Creating Effective SKU Systems
Let’s look at some examples:
- Cups:
- Tea Cup Black, Model 1 = TC01-B
- Tea Cup White, Model 1 = TC01-W
- Tea Cup Red, Model 1 = TC01-R
- Jeans (Example using a Spring 2017 Style):
- 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 2017, Red Jeans, Skinny Fit, Waist 36 = Sp17-JN-SF-36-RD
Why SKUs Are Essential for Your Business
- Industry Standard for Supply Chain Management: SKUs are the standard for effective supply chain coordination. Major platforms like Amazon require SKUs for product listings, and integrating with your wholesale partners will demand it. A solid SKU system ensures seamless flow from manufacturer to retailer.
- Speed and Accuracy in Inventory Tracking: SKUs provide instant product identification, dramatically speeding up warehouse processes. Instead of searching through endless product lists, employees can quickly locate items by simply scanning or entering the SKU.
- Enhanced Inventory Accuracy: With a defined SKU system, you can confidently validate your stock levels. This minimizes discrepancies, reducing stockouts and overstocking, which directly impacts profitability.
- Improved Quality Control: Consistent SKU usage minimizes miscommunication and errors during picking, packing, and shipping – leading to fewer incorrect orders and happier customers.
- Reduced Operational Costs: Accurate inventory data fueled by a robust SKU system translates to decreased labor costs, reduced waste, and optimized storage space.
Key Considerations When Building Your SKU System:
- Keep it Simple and Clear: Use easy-to-understand abbreviations and avoid jargon.
- Color Codes: Always use letters for colors (e.g., B=Black, R=Red, W=White). Avoid relying on numbers which can be confusing.
- Avoid Confusing Characters: Steer clear of “O” (which looks like zero) and symbols like <, >, *, or accents.
- Data Integrity: Don’t use forward slashes (/) – they can cause issues when exporting data to Excel.
- Formatting: Use underscores (_) or dashes (–) to separate elements within your SKUs for easier readability and data entry.
Investing in a strong SKU system is a strategic move that will pay dividends in terms of efficiency, accuracy, and ultimately, the growth of your business.
