What is an SKU Code? (How to Create SKU Numbers)
In the world of inventory management, a Stock Keeping Unit (SKU) is a unique identifier assigned to each individual product. This code is used to track inventory levels, manage orders, and categorize products. In this blog post, we will delve into the concept of SKU codes, their significance, and how to create effective SKU numbers.
1 Understanding SKU Codes
A SKU code is an alphanumeric string that uniquely identifies a product within a company’s inventory system. It typically consists of a combination of letters and numbers that represent specific attributes of the product, such as its type, brand, size, color, and other relevant details.
What is an SKU Code?
2 Significance of SKU Codes
SKU codes play a crucial role in inventory management, serving several key purposes:
Product Classification
SKU codes help classify products based on various characteristics, including:
- Product Type: Example: T-shirts, jeans, shoes, etc.
- Brand: Example: Nike, Adidas, Samsung, etc.
- Size: Example: S, M, L, XL, etc.
- Color: Example: White, black, red, blue, etc.
- Material: Example: Cotton, polyester, leather, etc.
- Price: Example: $100, $200, etc.
Product Classification
Inventory Tracking
SKU codes enable accurate tracking of the number of products in stock, allowing businesses to:
- Replenish Inventory Timely: When a product’s stock is low, businesses can replenish it promptly, avoiding stockouts.
- Manage Inventory Efficiently: Businesses can monitor the sales velocity of each product to adjust inventory levels accordingly.
Inventory Tracking
Rapid Product Retrieval
With SKU codes, finding products in a warehouse becomes faster and easier. Warehouse staff can simply enter the SKU code into the system to locate the product.
Rapid Product Retrieval
Efficient Order Processing
SKU codes facilitate faster and more accurate order processing. Upon receiving an order, warehouse staff can use the SKU code to identify the products to be picked and packaged.
3 Creating Effective SKU Numbers
When creating SKU numbers, it’s important to incorporate elements that make them easy to remember and manage. A typical SKU code consists of the following components:
- Manufacturer or Brand Name:
- Brief Product Description: Material, size, etc.
- Purchase Date: Typically the last two digits of the year.
- Warehouse Location: If the company has multiple warehouses.
- Product Size:
- Product Color:
- Product Condition: New or used.
For example, a SKU code for a blue, medium-sized cotton T-shirt purchased in 2023 from the Nike warehouse in California might be: NIKE-CTN-M-BLU-23-CA
Creating Effective SKU Numbers
Note: The specific elements included in an SKU code and their order may vary depending on the company and industry.
4 Benefits of Using SKU Codes
Implementing SKU codes offers numerous advantages for businesses, including:
- Efficient Inventory Management: SKU codes streamline inventory tracking, warehouse organization, and order processing.
- Cost Savings: They reduce inventory management and labor costs.
- Increased Revenue: By optimizing inventory levels and reducing stockouts.
Benefits of Using SKU Codes
In conclusion, SKU codes are essential tools for inventory management. They provide unique identifiers for products, enabling businesses to efficiently track, classify, and manage their inventory. By creating effective SKU numbers and implementing a robust system for using them, businesses can optimize their inventory operations, reduce costs, and increase revenue.
