A product SKU could be defined as a code which features 8-12 characters in length and have a formula that is imbued with some sort of meaning for inventory management such as size, color, price, name supplier and other product types, which allows easy inventory tracking of the item.
A small basic tip for product SKU is to avoid starting your SKU with a zero. Why, you might ask, because the spreadsheet software such as Excel will discredit the 0 which is going to bring you more troubles in the future. For example, a pair of big sized women’s Gucci sunglasses in brown color could have a SKU like this:
GUCCI-BIG-SG-BR – this means Gucci, big-sized, sunglasses in brown color.
Good SKU management will allow you to optimise your stock levels, thus leading to an increase in profit. Also, a good SKU system will allow you to find out which items are being sold the most which are reversed. From those insights you could work out on your business strategies and further prevent overstock and potential losses.
Also, it is important to note that SKU is totally different from barcodes. SKU is an internal code used by individual businesses while a barcode is an universal code created by the manufacturer.
There is no such thing as the maximum number of SKUs your business should have. Big businesses tend to have abundant SKUs due to the large variety of products and/or services they provide.
PRODUCT SKU BENEFITS
- Forecasting
Good inventory tracking, as with the benefits stated above, could also help you forecast future demands from the market. Therefore, you could always have trendy items ready-in-stock and enhance customer loyalty for your business.
- Increasing profits
As stated above, SKU helps you identify your best and worst sellers, thus preventing losses and overstock, which ultimately helps increase profits.
- Easier tracking inventory
Needless to say, the main idea of SKU is to offer a better method in inventory tracking for businesses.
