The A-Z of e-commerce

A Stock Keeping Unit (SKU) is a unique code or identifier assigned to a specific product or item in inventory management and retail operations. SKUs are used to track and manage individual items, enabling businesses to accurately monitor stock levels, streamline inventory control, and facilitate efficient order fulfillment and replenishment processes.

Key Features of SKUs

1. Uniqueness: Each SKU corresponds to a unique product or item within a company's inventory, distinguishing it from other products based on specific attributes such as size, color, model, or variant. SKUs are typically alphanumeric codes that provide a standardized means of identification and classification.

2. Granularity: SKUs can be structured to capture detailed information about product characteristics and attributes, allowing businesses to differentiate between similar items and variants. This granularity enables precise inventory tracking and management, particularly for products with multiple options or configurations.

3. Hierarchy: SKUs can be organized hierarchically to reflect relationships between different product categories, subcategories, and variants. This hierarchical structure facilitates efficient inventory management and reporting by grouping related SKUs together and simplifying navigation and analysis.

4. Integration: SKUs are integral to various aspects of retail and supply chain operations, including inventory management systems, point-of-sale (POS) systems, e-commerce platforms, and order fulfillment processes. By integrating SKU data across different systems and channels, businesses can ensure consistency and accuracy in inventory tracking and reporting.

5. Scalability: SKUs are scalable and adaptable to accommodate changes in product offerings, inventory levels, and business requirements over time. Businesses can easily add new SKUs, modify existing ones, or retire obsolete SKUs as needed to align with evolving market trends and customer demands.

Benefits of SKU Management

1. Inventory Accuracy: SKUs enable businesses to maintain accurate and up-to-date records of inventory levels, locations, and movements. By associating each SKU with specific quantities and locations, businesses can minimize stockouts, overstocking, and discrepancies, ensuring optimal inventory management and control.

2. Order Accuracy: SKUs facilitate precise order fulfillment and picking processes by uniquely identifying each item in a customer's order. By scanning SKUs at various stages of the fulfillment process, businesses can verify product availability, ensure accurate picking and packing, and minimize errors and discrepancies in customer orders.

3. Data Analysis: SKUs provide valuable data for analyzing product performance, sales trends, and customer preferences. By tracking sales of individual SKUs over time, businesses can identify best-selling products, forecast demand, and optimize inventory replenishment and assortment planning to maximize profitability and customer satisfaction.

4. Efficiency and Productivity: SKUs streamline inventory management and operational processes, reducing manual effort and improving efficiency and productivity.