Glossary

A Stock Keeping Unit (SKU), also known as a product code, is a distinctive identifier used to monitor and manage inventory. It plays a vital role in effective inventory management systems, enabling businesses to accurately track and trace specific products across their supply chain. Each SKU corresponds to a particular item, allowing companies to differentiate between similar products and effectively manage their stock levels. SKUs often contain information such as product type, size, color, and style, providing valuable details that facilitate efficient inventory control.

In the world of retail and B2B eCommerce, SKUs serve as unique fingerprints for products. They are assigned by businesses and can be customized to suit their internal inventory tracking needs. SKUs provide granular information about products and help businesses maintain accurate records of their inventory. By incorporating specific attributes into SKUs, such as color or size, companies can quickly identify and locate specific items, streamlining the order fulfillment process and reducing the chances of errors or confusion.

Effective SKU management is crucial for optimizing inventory control and meeting customer demand. By assigning a distinct SKU to each product variant, businesses can avoid stockouts and ensure they have sufficient stock levels to fulfill customer orders. For example, if a clothing retailer offers a shirt in multiple sizes and colors, assigning a unique SKU to each combination allows for precise tracking and monitoring of inventory levels for each specific shirt variant. This information enables businesses to replenish stock in a timely manner, preventing stockouts and avoiding missed sales opportunities.

Moreover, SKUs play a vital role in streamlining inventory-related processes, such as receiving, counting, and reconciling stock. When new inventory arrives, the assigned SKUs are used to identify and allocate the products to their respective locations within the warehouse or store. During inventory counts, SKUs help verify the accuracy of stock levels by comparing physical counts to the recorded quantities associated with each SKU. This process aids in identifying discrepancies, reducing errors, and facilitating efficient inventory reconciliation.

In addition to internal inventory management, SKUs also benefit external stakeholders, such as B2B and B2C suppliers and distributors. When businesses communicate their SKU system to suppliers, it enables them to accurately fulfill orders by referring to the assigned SKUs. Distributors, on the other hand, can optimize their warehousing and logistics operations by using SKUs to efficiently store and transport products. The standardization provided by SKUs simplifies the exchange of information and enhances collaboration within the supply chain.

A Stock Keeping Unit (SKU) is a unique identifier used to track and manage inventory. By assigning distinct SKUs to each product variant, businesses can effectively monitor stock levels, streamline order fulfillment processes, and ensure accurate inventory counts. SKUs provide valuable information about products, facilitating efficient inventory control and supporting collaboration with suppliers and distributors. With proper SKU management, businesses can optimize their inventory management systems, reduce stockouts, and enhance overall operational efficiency.