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Stock Keeping Unit Determination

Stock Keeping Unit Determination

  • A Stock Keeping Unit or SKU is a number that is assigned to a product for the purpose of inventory management and ease of tracking. In other words, a stock keeping unit is a unique identifier assigned to each product for easier and more efficient record-keeping.
  • SKU codes are used for the identification and tracking of products. 
  • SKU are absolutely mission-critical in any warehouse, manufacturing or retail environment because they simplify the act of inventory management and analysis by ensuring that your people speak with a common language. 
  • SKU ensure that there can be no confusion over what make, model, brand or specification of a product a customer ordered, because there’s only one code for every permutation.

Stock Keeping Unit

  • SKUs are alpha-numeric codes, that is, they use both numbers and letters. 
  • SKU are designed to be legible by humans at a glance (unlike a UPC) and offer important information. 
  • For example:
    • A blue, cotton T-shirt, size medium: T-COT-MED-BL
    • A 1kg jar of chocolate peanut butter: PB-1KG-CHOC
    • An A/C condenser made by “Air Co.”, part number 3369, designed for a Toyota car: AICO-ACCON-3369-TOY

Importance of Stock Keeping Units

  • SKUs are highly important and commonly used by retail stores, warehouses, and product fulfilment centres. 
  • Stock keeping units have many key uses, such as the following:
    • Identifying a specific product
    • Tracking inventory to know how many of a specific product is available
    • Helping reconcile stock levels of products
    • Identifying shrinkage in inventory
    • Determining which products are the most profitable (through analysis)
    • Helping identify reorder point for products
    • Helping customers save time by enabling them to find products quickly