SKU, or stock keeping unit, is a unique identifier assigned to each product in inventory management systems. It helps businesses organize and track their products efficiently. SKU numbers are critical for businesses of all sizes as they help in the identification and management of inventory.
In this article, we will explain why we need to use SKU numbers, what steps you should take for creating a SKU number, as well as discuss the best practices for managing them.
Why we need SKU numbers
SKU numbers are very important in the world of inventory management. They are assigned to each product to help businesses organize and track their inventory efficiently. Here are the reasons why we need SKU numbers:
1. Efficient inventory management: SKU numbers help businesses manage their inventory more efficiently. By assigning a specific ID to each product, businesses can easily track its movement in the supply chain, including its location, sales, and stock levels.
2. Accurate sales tracking: SKU numbers can help businesses track sales by product, allowing them to analyze sales data and identify trends. This data can help businesses make informed decisions about their products, such as which products to promote or discontinue.
3. Streamlined ordering process: SKU numbers can also help businesses streamline their ordering process. When businesses need to reorder a product, they can easily refer to the SKU number to ensure that they are ordering the correct product.
4. Improved customer service: By using SKU numbers, businesses can quickly identify and locate products in their inventory, making it easier to fulfill customer orders. This leads to improved customer satisfaction and repeat business.
5. Reduced errors: By using SKU numbers, businesses can reduce errors in their inventory management. Using special IDs, businesses can easily identify and locate products, reducing the likelihood of errors in ordering, shipping, or tracking inventory.
Read more to learn how to optimize inventory turnover.
Who needs to use SKU numbers
SKU numbers are essential for any business that deals with inventory management like:
1. Retailers: Retailers of all sizes, from small boutique shops to large department stores, need to use SKU numbers to manage their inventory. By assigning a unique identifier to each product, retailers can track inventory, sales, and reorder products efficiently.
2. Manufacturers: Manufacturers also need to use SKU numbers to manage their raw materials and finished goods inventory. By assigning SKU numbers to each product, manufacturers can check the level of their stock and make informed decisions about production and shipping.
3. Distributors: Distributors who handle products from multiple manufacturers also need to use SKU numbers to manage their inventory efficiently. By assigning a unique identifier to each product, distributors can track their inventory levels and manage their supply chain effectively.
4. E-commerce businesses: Ecommerce businesses rely heavily on SKU numbers to manage their online stores. By assigning a unique identifier to each product, e-commerce businesses can track their stock, manage orders, and ensure that they are shipping the correct products to their customers.
5. Service providers: Service providers who manage equipment or other assets also need to use SKU numbers to track their inventory. By assigning a unique identifier to each asset, service providers can track its location, maintenance history, and other important information.
Steps to create a SKU number
1. Determine the purpose of SKU number: Before creating a SKU number, it’s essential to determine the purpose of the number. It could be for tracking sales, managing inventory, or product categorization.
2. Identify the product characteristics: The next step is to identify the product’s unique characteristics that will help differentiate it from other products. These could include color, size, weight, material, or design.
3. Decide on SKU format: Once the product characteristics are identified, you can decide on the SKU format. The format could be alphanumeric or numeric, and it’s important to keep it consistent throughout the inventory system.
4. Establish a unique identification system: To create a unique identification system, you can assign numbers or letters to represent the product characteristics. For example, if you’re selling shoes, you could assign “S” for size and “C” for color, and combine them to form a unique identifier like “SC001.”
5. Test the SKU system: Before implementing the SKU system, it’s important to test it on a few products to ensure that it’s working efficiently and that it’s easy to use.
Best practices for managing SKU numbers
Keep SKU simple and consistent: To avoid confusion, it is essential to keep SKU numbers simple and consistent throughout the inventory management system.
1. Update SKU regularly: As products evolve, it’s important to update the SKU numbers to ensure that they remain relevant.
2. Use SKU number to manage inventory: SKU numbers can help track inventory levels and prevent overstocking or understocking of products.
3. Incorporate the SKU number in the product description: By incorporating the SKU number in the product description, it becomes easier for customers to identify the product and for businesses to manage inventory.
4. Use special software to manage SKU numbers and your inventory overall: Synder Sync simplifies inventory tracking by finding SKU numbers for you. Just connect your sales platform(s), payment channels, and accounting software to Synder, and it’ll take care of the rest. Should Synder not be able to find a SKU number in your books, it’ll automatically create a new product with the corresponding SKU number. These operations will bring you critical product data, such as the volume of its sales, the platform(s) where it was sold, shipping details, and returns if any, in one source of truth. Moreover, Synder allows you to sync historical data with no time limits, which will let you analyze the dynamics of your business processes. Plus, Synder software eliminates errors and duplicate entries by cross-checking all operations on all connected platforms. With Synder Sync, you can automate your inventory tracking and improve your business efficiency in minutes.
Ready to try this solution out? Take advantage of a 15-day free trial. Or if you prefer the video chat format, book office hours, and you’ll learn more about how Synder can ease up routine business operations.
Learn more about inventory management software.
To sum up, SKU numbers are a vital part of inventory management systems. Creating a unique and efficient SKU system can streamline inventory management and help businesses save time and money. By following the steps outlined in this article, businesses can create a SKU system that works for them and their products. Incorporating best practices such as keeping the SKU simple and consistent, regularly updating the system, and using special software for tracking can further optimize inventory management. By implementing an efficient SKU system, businesses can improve their bottom line and customer satisfaction.