Definition
A Stockkeeping Unit (SKU) is a unique alphanumeric code assigned to a product by a retailer to track inventory levels and sales easily. Each SKU typically identifies one specific product, including details such as item, brand, size, color, and other characteristics that are distinct from other products in the retailer’s inventory. SKUs are instrumental in inventory management and are often associated with barcodes for automation in the point of sale (POS) systems.
Examples
-
Retail Apparel Store:
- Product: Men’s T-Shirt
- Brand: ABC
- Size: Large
- Color: Blue
- SKU: ABC-L-BLU-001
-
Ecommerce Electronics Retailer:
- Product: Wireless Mouse
- Brand: XYZ
- Model: Pro 200
- SKU: XYZ-PRO200-BLK
-
Grocery Store:
- Product: Organic Bananas
- Brand: Fresh Farms
- Weight: 1 lb bundle
- SKU: FF-BAN-1LB
Frequently Asked Questions (FAQs)
What is the purpose of an SKU?
An SKU helps retailers and businesses manage inventory, track sales, and streamline the checkout process. It aids in identifying products quickly and efficiently.
How is an SKU different from a UPC?
A Universal Product Code (UPC) is a type of barcode widely used in retail globally, assigned by the manufacturer, while an SKU is assigned by the retailer and is specific to that retailer’s inventory management system.
Can different retailers have different SKUs for the same product?
Yes, different retailers can assign different SKUs to the same product for their internal inventory tracking purposes. SKUs are not standardized across retailers.
How do you create an SKU?
Creating an SKU involves identifying the product’s unique attributes such as brand, category, size, color, and then generating a code that incorporates these elements. Retailers usually establish a convention for SKU structure.
Are SKUs used in ecommerce?
Yes, SKUs are extensively used in ecommerce for inventory management, order processing, and sales tracking. They help manage large product catalogs effectively.
- Barcode: A graphical representation of data that is machine-readable and used to track products.
- Inventory Management: The process of ordering, storing, and using a company’s inventory.
- Product Identifier: A unique code or name for a product used in inventory management and sales.
- Point of Sale (POS) Systems: Systems used by retail businesses to process sales transactions.
Online Resources
Suggested Books for Further Studies
- “SKU Success: Build, Manage, and Analyze the Perfect Product Inventory” by John Smith
- “Retail Management: A Strategic Approach” by Barry Berman and Joel R. Evans
- “Essentials of Inventory Management” by Max Muller
- “Barcodes for Beginners: Understanding the Basics” by Kesheena Birch
Fundamentals of Stockkeeping Unit (SKU): Inventory Management Basics Quiz
### What does SKU stand for?
- [ ] Stock Kompliance Unit
- [ ] Systematic Key Unit
- [x] Stockkeeping Unit
- [ ] Store Kiosk Unit
> **Explanation:** SKU stands for Stockkeeping Unit, which is a unique code assigned to a product to manage inventory.
### What distinguishes an SKU from a UPC?
- [x] SKUs are assigned by retailers while UPCs are standardized barcodes.
- [ ] Both SKUs and UPCs are globally standardized identifiers.
- [ ] UPCs are used only in ecommerce, SKUs only in physical stores.
- [ ] SKUs are numeric, UPCs are alphanumeric.
> **Explanation:** SKUs are assigned by retailers for internal inventory management while UPCs are standardized barcodes used globally.
### Why are SKUs important for retailers?
- [x] They help track inventory levels and sales.
- [ ] They provide international product recognition.
- [ ] They are required for products to be legally sold.
- [ ] They make products more durable.
> **Explanation:** SKUs help retailers in tracking inventory levels, managing orders, and analyzing sales data efficiently.
### Can two different retailers have the same SKU for a product?
- [ ] Yes, SKUs are globally standardized.
- [ ] Only if they are part of the same supply chain.
- [x] No, SKUs are unique to each retailer.
- [ ] Only for electronics and household items.
> **Explanation:** SKUs are assigned by individual retailers and are specific to their inventory systems, making them unique to each retailer.
### What information is typically included in an SKU?
- [x] Brand, size, color, and unique attributes of the product
- [ ] Manufacturing country and expiry date
- [ ] Retailer's location and stock level
- [ ] Customer reviews and ratings
> **Explanation:** SKUs generally include details like brand, size, color, and other unique attributes that differentiate the product within the retailer's inventory.
### Are SKUs relevant for ecommerce businesses?
- [x] Yes, they are crucial for managing large product catalogs.
- [ ] Not at all, as ecommerce relies on different tracking methods.
- [ ] Only for digital products.
- [ ] SKUs are relevant only for brick-and-mortar stores.
> **Explanation:** SKUs are highly relevant for ecommerce businesses as they help in managing large product catalogs, order processing, and sales tracking.
### How does a barcode relate to an SKU?
- [x] A barcode can represent an SKU for easier scanning.
- [ ] A barcode is a higher-level identifier than an SKU.
- [ ] SKUs do not get encoded into barcodes.
- [ ] Barcodes and SKUs are entirely unrelated.
> **Explanation:** Barcodes can represent SKUs to facilitate scanning and automated data capture in inventory and sales systems.
### What is a key function of using SKUs in POS systems?
- [ ] Managing employee attendance.
- [x] Streamlining checkout and sales transactions.
- [ ] Enhancing store aesthetics.
- [ ] Broadcasting advertising messages.
> **Explanation:** In POS systems, SKUs streamline the checkout process and sales transactions by allowing quick product identification and tracking.
### Why might a retailer create a detailed SKU coding convention?
- [ ] To confuse competitors
- [ ] To hide stock levels from customers
- [x] To maintain consistent and organized inventory management
- [ ] To comply with international trade regulations
> **Explanation:** A detailed SKU coding convention helps retailers maintain consistency and organization in managing their inventory.
### What role do SKUs play in relation to inventory audits?
- [ ] They are irrelevant to inventory audits.
- [x] They simplify tracking and verifying stock levels.
- [ ] They indicate product origins during audits.
- [ ] They replace the need for physical audits.
> **Explanation:** SKUs simplify the process of tracking and verifying stock levels during inventory audits, making the audits more efficient.
Thank you for exploring our comprehensive inventory management concept and tackling our challenging quiz questions. Keep enhancing your merchandising knowledge!
