Stock Keeping Unit (SKU)

Stock Keeping Unit (SKU) is a unique identifier assigned to a specific product or item for the purpose of inventory tracking and management. Each SKU represents a distinct item, including its size, color, model, or configuration, and is used to streamline warehousing, procurement, and sales operations.

SKUs help procurement and inventory teams monitor stock levels, reorder products, prevent overstocking, and analyze product performance. They are typically used in ERP or warehouse management systems to enable efficient product identification and movement.

Unlike barcodes, which may be standardized, SKUs are created internally and customized to suit a company’s cataloging needs.

✅ Common usage: “The procurement team reviewed SKU-level data to identify slow-moving inventory and optimize reorder quantities.”

❓ Frequently Asked Questions

Why are SKUs important in procurement?

SKUs are crucial in procurement because they enable accurate tracking of inventory levels, streamline the ordering process, and help prevent stockouts or overstock situations. They also facilitate better communication between suppliers and buyers by providing a standardized reference for each product.

How is an SKU different from a barcode?

An SKU is a unique alphanumeric code used internally by a company to identify and manage products, while a barcode is a machine-readable representation of data that can be scanned to retrieve information about a product. Barcodes often include SKU information but are used for different purposes, such as point-of-sale transactions.

Can SKUs be reused for different products?

It is generally not recommended to reuse SKUs for different products, as this can lead to confusion and errors in inventory management. Each SKU should be unique to a specific product to ensure accurate tracking and reporting.

How are SKUs created?

SKUs are typically created by combining various attributes of a product, such as its category, size, color, and model number. The format and structure of an SKU can vary depending on the company's inventory management system and specific needs.

What role do SKUs play in supply chain management?

In supply chain management, SKUs help streamline operations by providing a consistent and efficient way to track products throughout the supply chain. They facilitate better inventory control, improve order accuracy, and enhance overall supply chain visibility.

How can SKUs improve inventory accuracy?

SKUs improve inventory accuracy by providing a detailed and organized system for tracking products. This reduces the likelihood of errors in inventory counts, helps identify discrepancies quickly, and ensures that stock levels are accurately maintained.

Are SKUs the same across different companies?

No, SKUs are not standardized across different companies. Each company creates its own SKU system based on its specific inventory management needs and product attributes. As a result, the same product may have different SKUs in different companies.

🧠 Suggested readings

Want to build on your knowledge of Stock Keeping Unit (SKU)? These articles cover essential strategies and advanced tips to help you deepen your understanding and apply best practices with confidence.

• 📊 Understanding the Kano Model: A Framework for Enhancing Customer Satisfaction in Product Development
• 📄 Optimizing Procurement: Best Practices in Contract Management
• 🏢 Examples of Shared Services Centers: Streamlining Business Operations
• 🔍 Unveiling the Power of Strategic Business Systems
• 🧹 A Cleaner, More Organized Workspace: Adopting the 5S Housekeeping System
• 🏢 What Is an Internal Customer?
• 📊 Understanding Reference Models in Organizational Management

📚 Suggested books

Explore these recommended books to broaden your knowledge and deepen your expertise in Stock Keeping Unit (SKU). Each title provides practical insights and proven strategies to help you advance with confidence.

"The Everything Store: Jeff Bezos and the Age of Amazon" by Brad Stone

This book provides an in-depth look at the rise of Amazon and its founder, Jeff Bezos. It explores the company's innovative approach to retail, including its use of SKUs to manage inventory and streamline operations.

"Retail Management: A Strategic Approach" by Barry Berman and Joel R. Evans

This comprehensive guide covers various aspects of retail management, including inventory control and SKU management. It offers strategies for effective retail operations and insights into the role of SKUs in optimizing inventory.

"Supply Chain Management: Strategy, Planning, and Operation" by Sunil Chopra and Peter Meindl

This book delves into the complexities of supply chain management, with a focus on strategic planning and operations. It discusses the importance of SKUs in inventory management and supply chain efficiency.