Stock-Keeping Unit Definition
More commonly known as SKU, this term pertains to the unique identification of a particular product. It’s used in inventory management and enables retailers to track and distinguish products from one another. A SKU represents all the attributes of an item, including style, brand, size, color, and more.
If you are new to retailing, then you are probably asking the question, “What is an SKU?” SKU stands for Stock Keeping Unit, and it often comes up in any discussion about the management of inventory. It is a unique code placed on a product that you can use to identify and track the product quickly. SKUs are used in physical and online stores, catalogs, product fulfillment centers, and warehouses. Using SKUs will help you quickly determine the products that are going out of stock and those the rate at which your products are selling. Suffice to say, using SKUs in your retail business will help boost profit.
SKUs are different from model numbers, although some retailers decide to include the model number of the product in the SKU. An SKU contains information such as; the product’s size; the color of the item; the price and style of the product; and the manufacturer. They are usually grouped by-products, to make analysis easier. For example, if you are shopping on Amazon, you will notice that Amazon suggests some products related to the one you are buying. This is one of the advantages of using SKUs, and it helps Amazon sell those related products easily.
You can use Stock Keeping Units to track your products, giving you a greater sense of security. By knowing the number of products you have available, you can make intelligent decisions on whether or not to order for new products. This will give you a more accurate figure as well as making your work a lot easier than manual stocking. Another advantage of SKUs is the fact that they help you quickly identify inventory shrinkage in your retail business. Shrinkage is the difference in the number of items you have recorded and the number you have in store. With SKUs, you will be able to identify any form of shrinkage in your retail store, and you can fix it quickly.
Imagine if you had a large store and you have to do the inventory manually. It is going to be very tedious and frustrating, not to talk of the fact that you may end up making mistakes along the way. Adding an SKU to all variations of your product means you can instantly get the number of any product in your store at any given time. Pretty convenient right? The aim o,f any business is to make a profit; therefore, it is essential that you adopt any system that will increase your profit margin. By using SKUs, you can quickly identify products that need restocking and monitor the sales of all the products in your store. This way you have full knowledge of your profit at every point.
If you are thinking of introducing SKUs to your retail business, then, you are making a smart move. However, it is crucial that you adopt a simple system. It is good practice to use the first part of the SKU for product grouping and use the other part for unique values like the date.