As an e-commerce startup founder, you may find managing your inventory a daunting task. With a constant cycle of incoming goods, outgoing orders, and returns, it can feel overwhelming and get’s pretty crazy once you factor in product variations for colour, size and even label tweaks for the country it will be sold in!
However, there’s a simple solution that can help you lay a solid foundation for your business’s future growth: SKU numbers.
What is an SKU Number?
SKU stands for Stock Keeping Unit. It’s a unique identifier that helps businesses track individual products within their inventory system. SKUs can contain alphanumeric characters, barcodes, or a combination of both, depending on your business’s needs.
The purpose of a SKU is to help businesses manage their inventory more efficiently. By using SKUs, you can easily monitor your inventory levels, replenish stock in a timely manner, and prevent stockouts or overstocks. They also allow you to analyse sales data, identify which products are performing well, and make informed decisions on pricing, marketing, and promotions.
SKU vs UPC: What’s the Difference?
A SKU code is assigned by you, the seller, and is used only to track inventory internally. Universal Product Codes (UPC), which are assigned externally by a nonprofit, are used for external tracking by retailers and distributors at the point of sale (POS).
Creating SKUs does not have a standardised practice, but the practice of creating UPCs is standardised. The same product from a different seller will likely have a different SKU, but UPC codes will have the same code regardless of the seller.
Why is a SKU System Important for Your Business?
- Industry Standard: SKUs are industry standard throughout the supply chain. Operating without SKUs is like having a business without a website – you just can’t compete without it.
- Quick Information: SKU codes are a form of shorthand that helps everyone quickly understand what the product is at a glance.
- Efficiency: SKU codes speed up the process of finding products because they allow you and your employees to search, track, and reference products and inventory levels in your warehouse.
- Accuracy: Using SKU codes offers businesses the benefit of achieving significantly more accurate inventory management.
- Quality Control: With everyone in your business using SKU codes, you decrease the number of problems that occur because of miscommunication.
Creating SKUs: Best Practices
Creating SKUs involves deciding what numbers and identifiers will be included in your SKUs, and in what order. Will you include the brand name? The colour? The manufacturer’s part number? Think about what attributes your products typically have that distinguish them from other products to figure out what needs to be included.
You’ll also want to create and maintain a list of codes for things like manufacturers, brands, colours, and sizes. This can be done on a spreadsheet by making a list of the manufacturers and brands that you carry in one column, and then assigning a code to each of them.
Use our SKU generator template
- Download the Template: First, download the CSV template provided below or download the Excel version to use the formulas. It should open in any spreadsheet software like Microsoft Excel, Google Sheets, or OpenOffice Calc.
- Understand the Columns: Each column in the template represents a different attribute of your product. Here’s what each column means:
SKU: This is the unique identifier for the product.
Product Name: This is the name of the product.
Brand: This is the brand of the product.
Category: This is the category the product falls under.
Color: This is the color of the product.
Size: This is the size of the product.
Price: This is the price of the product.
- Fill in the Template: Start filling in the template with your product information. Each row represents a different product. Make sure the SKU for each product is unique.
- Save Your Work: Once you’ve filled in the template with your product information, save the file. Make sure to keep the file in CSV format.
- Upload the File: Now, you’re ready to upload the file to your inventory management system. The exact process for this will depend on the system you’re using, but there should be an option to import products from a CSV file.
- Check Your Work: After you’ve uploaded the file, check your inventory management system to make sure the products were added correctly. If there are any errors, you may need to adjust your CSV file and re-upload it.
Remember, consistency is key when creating SKUs. Keeping your SKUs consistent across all selling channels will save you time in the future and make it easier to integrate with various SaaS tools.
SKU,Product Name,Brand,Category,Color,Size,Price 123-ABC-RED-S,Red T-Shirt,ABC,Clothing,Red,Small,19.99 123-ABC-RED-M,Red T-Shirt,ABC,Clothing,Red,Medium,19.99 123-ABC-RED-L,Red T-Shirt,ABC,Clothing,Red,Large,19.99 123-ABC-BLU-S,Blue T-Shirt,ABC,Clothing,Blue,Small,19.99 123-ABC-BLU-M,Blue T-Shirt,ABC,Clothing,Blue,Medium,19.99 123-ABC-BLU-L,Blue T-Shirt,ABC,Clothing,Blue,Large,19.99
How Packed Posted uses SKUs to improve operating efficiencies
In the context of a third-party logistics (3PL) setting, such as Packed Posted, SKUs take on an even greater significance. They serve as a critical tool for verifying order contents. Each item is scanned using barcode readers, and the system cross-references these scans with the expected SKUs or UPC barcodes for the order. This process ensures that the correct items are being dispatched. The system will not allow packers to dispatch an order until it has been fully verified, thereby significantly reducing the risk of errors. This not only enhances operational efficiency but also boosts customer satisfaction by ensuring that customers receive exactly what they ordered.
Furthermore, maintaining consistency in SKUs across different selling channels can save you countless hours in the future and streamline the integration process with various SaaS tools. When your SKUs match across all platforms, it becomes much easier to track inventory levels, analyse sales data, and manage orders, regardless of where the sale was made. This consistency also simplifies the process of integrating with various software solutions, as the same SKU can be used to link and synchronise data across multiple systems. In essence, consistent SKUs serve as a common language, enabling seamless communication and data exchange between different platforms and tools, thereby optimising your business operations.
And finally, to conclude, SKUs play a crucial role in inventory management, as they enable businesses to efficiently track, manage, and analyse their products. By using a unique identifier, retailers can optimise their inventory control, order fulfilment, reporting, and customer support processes.
If you require any advise or help around SKUs please get in touch.