How to Create an SKU Number [2024 Update]

In this article, we will cover a step-by-step guide on how to create an SKU number for your inventory. Read on to learn more. 

How to Create an SKU number?

Here's a step-by-step guide on how to create SKU (Stock Keeping Unit) numbers:

Step 1: Define the Purpose and Information Requirements

Before creating SKU numbers, it's crucial to understand what information you need to convey to them. Consider the following:

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Product Type: What is the general category of the product?

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Attributes: What attributes or characteristics are essential to describe the product, such as size, color, style, or material?

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Brand or Manufacturer: Do you want to include the brand or manufacturer name?

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Unique Identifier: Do you need a unique identifier for each product, especially if you have similar items?

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Sequential Number: Should SKU numbers include a sequential component to distinguish between products of the same type and attributes?

Step 2: Determine the Format

Based on the information requirements, decide on a format for your SKU numbers. Common formats include combining letters, numbers, and special characters. For example:

"TS-BL-M-001" for a blue, medium-sized T-shirt

"LPT-APPL-32-001" for a 32GB Apple laptop

Step 3: Assign Component Codes

Allocate specific codes for each component of your SKU format. For instance:

• TS for T-shirt (Product Type)
• BL for blue (Color)
• M for medium (Size)
• 001 for sequential numbering

Step 4: Build the SKU

Combine the component codes to create the SKU. In this step, you'll assemble the SKU using the codes you assigned. 

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For example: TS-BL-M-001" or "LPT-APPL-32-001

Step 5: Test and Verify

Before implementing your SKU system, test it with a few products to ensure that it accurately conveys the necessary information and is easily understood by your team.

Step 6: Document and Communicate

Document your SKU system, including the format and the meaning of each code, and communicate it to your team. This ensures everyone in your organization understands how to create and interpret SKU numbers consistently.

Step 7: Implement and Input into Systems

Start assigning SKU numbers to your products and input them into your inventory management system or database. Ensure that the SKU is prominently displayed on the product, packaging, and any associated documentation.

Step 8: Monitor and Update

Regularly review and update your SKU system as your product catalog evolves. Ensure that it continues to meet your business needs and remains consistent.

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By following these steps, you can create SKU numbers that effectively convey essential product information, help manage inventory, and streamline your business operations. 

Example of How to Create SKU Numbers

Let's create SKU numbers for a company called "HomeScape," which specializes in selling furniture. 

Step 1. Define Information Requirements:

HomeScape needs SKU numbers to manage its furniture inventory. They want the SKU to convey information about the product type, style, size, and color.

Step 2. Determine the Format:

‍HomeScape decides on the following SKU format: Product Type - Style - Size - Color - Sequential Number.

Step 3. Assign Component Codes:

• Product Type: "Furniture" (FURN).
• Style: "Sofa" (SOF), "Table" (TBL), "Chair" (CHR), etc.
• Size: "Small" (S), "Medium" (M), "Large" (L).
• Color: "Brown" (BR), "White" (WH), "Gray" (GR), etc.
• Sequential Number: Starts from 001 for each product type.

Step 4. Build the SKU:

For example, a medium-sized brown sofa would have the SKU: "FURN-SOF-M-BR-001."

Step 5. Test and Verify:

Before implementing the SKU system, HomeScape tests it with a few products to ensure it accurately conveys information.

Step 6. Document and Communicate:

The SKU system is documented and communicated to the team for consistent use.

Step 7. Implement and Input into Systems:

SKU numbers are assigned to products and input into the inventory management system. They are displayed on product tags and records.

Step 8. Monitor and Update:

HomeScape regularly reviews and updates the SKU system to adapt to changes in its product catalog and business requirements.

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By following this approach, HomeScape can effectively manage its furniture inventory with clear SKU numbers and facilitate inventory tracking and efficient business operations.

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We hope that this article has given you a better understanding of how to create SKU numbers for your business inventory. 

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If you enjoyed this article, you might also like our article on SKU proliferation or contribution SKU.