SKU, short for stock keeping unit, is an alphanumeric code (typically eight digits) that businesses use to identify and track their inventory. Companies issue their own SKU codes based on various characteristics of their products, such as manufacturer, style, color, type, and size.
SKUs are human-readable, meaning that staff members don’t need any equipment to read and comprehend the code. A SKU for an Adidas Men’s Originals t-shirt in a ribbed crew neck style, black color, and regular fit might look like this: ADI-RC-BLCK-REG.
SKUs are important because they help companies track their inventory more accurately to prevent stockouts and offer suggestions that enhance their customers’ experience. A retail business can use its SKU knowledge to direct its customers to related products when browsing a certain item on its eCommerce website.
SKUs also help sales and demand forecasting. With accurate inventory numbers, it’s easier for a business to answer questions like:
- How much should we restock before a specific season?
- How much inventory of our best sellers should we have?
- How much staff do we need on the shop floor during the holidays?
However before it can reap these benefits, the business must create its products’ SKU codes — also known as its SKU architecture.
There is no set way to create an SKU, but online SKU generators work well for businesses with small inventories. If a company uses a point-of-sale system, it can use that to generate SKU numbers for its pieces.