What is a SKU? Why do SKUs support warehouse management?
What is a SKU? How does it work? Why is it useful? These are the questions most businesses ask when they first learn about SKU product codes. With that in mind, the article below covers everything you need to know about what a SKU is. Read on!
What is a SKU?
SKU là gì?
SKU is short for StockKeeping Unit, i.e. a “stock keeping unit”.
Stock Keeping Unit: what is it? Put more simply, it is a code made up of letters and numbers used to classify the items in a warehouse. It can be a product or service, describing specifications, attributes and distinguishing marks that set items apart from one another. A particular advantage of SKUs is that their number is unlimited, no matter how far your product catalog expands.
A SKU is simply a product code
Why are SKUs useful?
What is a SKU? Why is it useful? These are questions many customers ask before choosing this stock keeping unit. A SKU is a unique combination of letters and numbers for each specific product category. By looking at this product code, you can identify each product group, determine what the product is without scanning the code, and easily extend product codes without constraints.
SKUs can be used to scan product codes
Why assign product barcodes?
The following reasons will help you understand why product barcodes should be assigned.
Shopping experience and store layout
Thanks to SKU product codes, you can organize your stores in the most scientific way so staff can easily find the products they need. SKU codes also help you classify products in a SKU numbering system by any criteria: item type, department, collection or supplier.
You can also arrange and manage products from the sales floor to the storage areas. SKUs not only help staff minimize errors when looking for products but also give customers the fastest, smoothest experience.
SKU stands for Stock Keeping Unit
Improving checkout and customer service
A well-organized SKU system makes customer service and checkout more accurate. At checkout, purchases are not only made at the right price, but the total quantity of products is also automatically reduced by the items sold. SKU numbers can even become scannable barcode labels, making checkout even faster.
Inventory management and profit
Inventory management errors are one of the main causes of lost profit for most retail businesses. These losses can come from any management or data entry error. Over time, without correction, small errors turn into big ones that seriously affect the company's profit.
In practice, without organizing storage using SKU codes, it would be very hard to khó keep track of goods because of overload. Not to mention that without knowing the location and quantity of goods, you won't know which items are out of stock and which are still available. Corrective measures then come too late, with unwanted consequences. So barcode-based warehouse management solutions are the optimal solution.
How to name SKUs for effective goods management
Assigning SKU codes is fairly simple: you just use letters or numbers as conventions for the information you want to include in the SKU.Some information you should include in the SKU: brand, branch, product category, product type, product version, size, color.
When setting up SKUs, arrange these fields in a consistent order. SKU length is unlimited; just arrange them so they are easy to understand and remember. You should combine letters and numbers so the fields are easy to separate.
➤ Details: Các inventory valuation methods
How to assign product codes with SKUs
Some notes on assigning SKU codes effectively
Don't cram in too much information
A SKU code represents product information, but that doesn't mean you should cram lots of information into it. Only consider the most important information for easily distinguishing products. Keeping the number of characters to a minimum is also a sensible choice if you don't want very long codes.
Pay attention to descriptions
Fields such as color, size, type and other product variants are characteristics that need to be combined in the SKU to clearly identify a product.
Example: At first, you might code red as 1, pink as 2 and purple as 3, which looks neat and easy to remember. But after a while, as the number of goods grows, these number strings cause trouble, and you'll forget what they meant. So SKU setup should be simple and effective in the long run.
Arranging the fields in a SKU code
Arranging the fields in a SKU code is like how you classify products. You can follow the most basic rule of ordering categories from largest to smallest for a company with many different items. Where goods are very diverse, for each product you need to identify the most important attribute that distinguishes it from similar products. Searching then starts from the most distinctive identifying features and moves on to the next attributes to find the exact product.
Notes on characters when assigning product SKU codes
This may seem simple, but without careful thought it can sometimes cause unwanted trouble and confusion. So what should you keep in mind when assigning SKU codes? First, always avoid the letter “O” because it can be confused with the number “0”, and the letter “I” with the letter “l”. Avoid using “/”, because Excel may format the SKU as a date. Other symbols such as >, <, @, #, *… can also cause confusion.
Above is the most specific information on what a SKU is; we hope it helps you in your production and goods management. But there's more: if your production or warehouse system needs advice on lean manufacturing and smart warehouse management, why not explore SmartBiz?
You can book a survey or request a demo to see how SmartBiz can optimize your warehouse and production operations.