What are SKU numbers and why are they important?
A SKU (stock keeping unit) is a unique number that identifies a product. Stock keeping unit – Wikipedia. SKU numbers are usually between 4 and 15 digits consisting of letters and numbers. They are important, because they allow your point of sale system to accurately track and measure your inventory.
Differences between SKU, barcode, UPC and serial numbers
Have you ever looked at a price tag and wondered what all the numbers and barcode information meant on it? There are a lot of ways to buy, sell and track inventory in a retail and/or ecommerce business. We will take a look at each of these.
A stock keeping unit – SKU is a a number that represents a product that you buy, sell and carry in your inventory.
A barcode or bar code is a method of representing data in a visual, machine-readable form. Barcode – Wikipedia. A good analogy for a barcode is that it’s like a foreign language. A barcode scanner reads the barcode and translates it into a readable form.
- Variable and fixed length
- Can contain letters and numbers or just numbers
- Does not contain any data other than the number
- Can be one dimensional or two dimensional
UPC Codes and Serial Numbers
UPC codes are a 12 digit numeric barcode that is assigned to manufacturers and is maintained by the Uniform Product Code Council. Grocery items use this type of barcode. You can buy the same can of creamed corn at thousands of different stores because they have a standardized barcode. A lot of retailers also like to use this barcode because it is small and always the same length.
A serial number is an additional unique number that identifies a unit. This can be very helpful in doing warranty work. A car is an example of a product that has a serial number assigned to it.
How should you create SKUs and should you use a numbering scheme?
Years ago, computers were not very fast, and terminals were few and far between. Because of this, I used to recommend that a SKU number be a combination of a three letter code for vendor and as close to the Vendor Product Number as possible. This allowed the vendor’s product numbers to show up together in reports and when filling out purchase orders.
Today with modern computing and mobile devices, a quick scan will give all of the information on a product in a second. Also, with modern databases the SKU number is not how you search for products in point of sale if you are not scanning them. Key word lookups are used and are very fast.
In my opinion, I would not spend time creating an elaborate SKU number. Let the point of sale software assign them automatically so no one messes up and duplicates a SKU or puts it in the wrong department. To avoid confusion, do not use the vendor’s product number as your SKU number.
Reporting is now done by department and class and a lot of reports can be customized so the vendor product numbers can be grouped together. The report engines of modern point of sale systems are very dynamic. The end user can create reports on the fly to get the information they’re looking for. It is no longer the case that the 15 reports that were included in the original point of sale system is all you could get unless you paid for expensive customizations.
SKU numbers are important
- They allow your point of sale system to accurately track and measure your inventory.
- SKU numbers allow your point of sale system to generate purchase orders based on sales history and velocity. Backorder vs. Backlog (thebalancesmb.com)
- SKUs also makes it possible to count inventory and identify shrinkage or data entry mistakes.
- They are a means to identify backorders and which orders can be filled when receiving products to stock. This keeps your customers happy and wanting to do business with you in the future.
It is important that SKU numbers are printed on product labels, along with barcode, description and color and size if necessary. This way sales people do not have to decipher SKU codes and if the barcode is not scannable, the SKU number can be entered manually at point of sale. Not only can store personnel identify products, your customers can identify them too.