In this article, we will discuss what SKU formats are, their key components and examples to better illustrate these various formats.
An SKU (Stock Keeping Unit) format is a structured alphanumeric code that includes elements like product category, variations, brand, and a numerical sequence. This helps businesses identify and manage individual products in their inventory.
Example: A SKU format for a Shoe might be "ABC123-Red-Small-Nike-001," where "ABC123" represents the product code, "Red" is the color variation, "Small" indicates the size, "Nike" is the brand, and "001" is the numerical sequence.
Significance of SKU Formats
Here are key reasons why following SKU formats are crucial in inventory management and business operations:
Efficient Inventory Management:
SKU formats provide a systematic way to categorize and track products, enabling businesses to efficiently monitor stock levels, quickly locate items, and streamline inventory operations.
Accurate Order Fulfillment:
Consistent SKU formats reduce the risk of errors in order processing. Staff can easily identify and pick the correct products, leading to improved order accuracy and customer satisfaction.
Data Analysis and Decision-Making:
SKU formats enable businesses to collect and analyze data on sales, trends, and product performance. This data informs informed decisions about restocking, pricing, and inventory optimization.
By identifying slow-moving or excess inventory, SKU formats help businesses maintain optimal stock levels, reducing carrying costs and potential losses due to overstocking or stockouts.
For businesses with multiple locations or warehouses, SKU formats that include location identifiers facilitate efficient inventory allocation and tracking across various sites.
Brand and Product Differentiation:
SKU formats can include brand or manufacturer identifiers, helping businesses distinguish between similar products from different sources or brands.
Reduction of Errors:
Adhering to SKU formats minimizes errors in various aspects of inventory management, from order processing to reordering, enhancing overall operational efficiency and reliability.
Components of the SKU Format
While there is no universal standard for SKU formats, the exact format of an SKU can be customized to suit the needs of a business. Here are some common elements that may be included in an SKU:
1. Product Identifier:
This component identifies the specific product or product category. It's often represented by a word or abbreviation. For instance:
"TSH" could represent T-shirts.
"LPTP" could represent laptops.
2. Variation Identifier:
If a product comes in different variations (e.g., size, color, or style), this part of the SKU distinguishes between them. Examples:
"BLK" could represent the color black.
"L" could denote the size large.
3. Brand or Manufacturer Identifier:
Some SKUs include information about the brand or manufacturer of the product. Examples:
"SONY" could indicate Sony-branded electronics.
"NIKE" could signify Nike footwear and apparel.
4. Location Identifier:
In cases where products are stored in multiple locations or warehouses, this component helps track inventory. For example:
"NYC" might represent products stored in New York City.
"WARE1" could denote a specific warehouse location.
5. Numeric Sequence:
A unique numerical sequence that provides a distinct identifier for each product or variation. It often increases sequentially. Examples:
"00123" for the 123rd T-shirt of a specific style.
"98765" for the 98765th laptop of a particular model.
SKU formats that vary from one business to another. They are usually tailored to the specific requirements of the organization using them. We will explore some of them below.