Stockkeeping Unit (SKU)

SKU Inventory Management Retail Logistics Product Identification Warehousing
A Stockkeeping Unit (SKU) is a unique identifier for each distinct product and service that can be purchased. It helps in tracking inventory and simplifying sales processes.
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Definition of Stockkeeping Unit (SKU)

A Stockkeeping Unit (SKU) is a unique alphanumeric code assigned to a product by a retailer to identify the product, manage inventory, and facilitate sales tracking. SKUs are essential for inventory management because they allow retailers to keep detailed and accurate records of stock levels, sales, and other product-related data. Unlike barcodes, which are standardized across all retailers and manufacturers, SKUs are unique to each retailer.

Examples of SKU

  1. Example 1: Apparel Retailer

    • SKU: “TSH-XL-BLUE”
    • Description: T-Shirt, Size XL, Color Blue

  2. Example 2: Electronics Store

    • SKU: “PHN-IPH12-BLK”
    • Description: iPhone 12, Black

  3. Example 3: Grocery Store

    • SKU: “VEG-CARROT-BAG”
    • Description: Bag of Carrots

Frequently Asked Questions (FAQ)

What is the difference between an SKU and a UPC?

  • Answer:
    • A Universal Product Code (UPC) is a standard barcode used to identify products across multiple retailers and locations. It is maintained by GS1. An SKU, on the other hand, is a unique identifier created by individual retailers for internal use in inventory and sales management.

Why are SKUs important for inventory management?

  • Answer:
    • SKUs enable retailers to track inventory levels precisely, manage stock replenishment, streamline order processing, and analyze sales data for better decision-making.

Can a product have more than one SKU?

  • Answer:
    • No, each unique product variant should have one SKU. However, different variants of the same product (e.g., different sizes, colors) will have different SKUs.

How are SKUs generated?

  • Answer:
    • SKUs are typically generated using a combination of letters and numbers that corresponds to various attributes of the product, such as type, size, color, and other distinguishing features. The format is usually decided by each retailer.

Do SKUs affect customer purchasing decisions?

  • Answer:
    • While SKUs themselves do not directly affect customer purchasing decisions, accurate SKU systems enable efficient inventory management, ensuring that products are available when customers want to buy them.
  1. Barcode: A machine-readable representation of data that provides information about the object it labels.
  2. Inventory Management: The process of ordering, storing, using, and selling a company’s inventory.
  3. Product Lifecycle: The stages a product goes through from development and introduction to decline and discontinuation.

Online Resources

  1. Investopedia: Stock Keeping Unit (SKU)
  2. Wikipedia: Stock-keeping unit
  3. GS1: The global standards organization

Suggested Books for Further Studies

  1. “Inventory Management Explained: A focus on Forecasting, Lot Sizing, Safety Stock, and Ordering Systems” by David J. Piasecki
  2. “Essentials of Inventory Management” by Max Muller
  3. “Operations and Supply Chain Management” by Roberta S. Russell and Bernard W. Taylor

Fundamentals of Stockkeeping Unit: Inventory Management Basics Quiz

### What does SKU stand for? - [ ] Stock Kinetics Unit - [ ] Simple Keeping Unit - [x] Stockkeeping Unit - [ ] Supplier Keeping Unit > **Explanation:** SKU stands for Stockkeeping Unit, which is a unique identifier for each distinct product and service that can be purchased. ### Can a single product have multiple SKUs? - [ ] Yes, to diversify sales channels. - [ ] Yes, to add variety in naming. - [x] No, each product variant has a unique SKU. - [ ] No, one SKU can represent multiple products. > **Explanation:** Each product variant should have a unique SKU, allowing stores to manage inventory accurately. ### What primary function does an SKU serve? - [ ] Advertising a product - [x] Identifying a product and tracking inventory - [ ] Setting the price of a product - [ ] Designing product packaging > **Explanation:** SKUs are used to identify products and track inventory, ensuring accurate stock management. ### How are SKUs created? - [ ] Randomly assigned by suppliers. - [ ] Standardized globally like UPCs. - [x] Unique to each retailer using a combination of letters and numbers. - [ ] Chosen by customers during purchase. > **Explanation:** SKUs are uniquely created by retailers based on specific attributes of their products. ### What does an SKU help to analyze apart from inventory levels? - [ ] Social media trends. - [ ] Delivery routes. - [x] Sales data for decision-making. - [ ] Customer service efficiency. > **Explanation:** SKUs help retailers analyze sales data, aiding in better decision-making processes. ### What is a UPC? - [ ] A local identifier used by small shops. - [x] A standardized barcode for product identification. - [ ] The same as an SKU. - [ ] A type of warehouse management system. > **Explanation:** A Universal Product Code (UPC) is a standardized barcode used to identify products across various retailers. ### Who typically generates SKUs? - [ ] Manufacturers - [x] Retailers - [ ] Customers - [ ] Warehouse staff > **Explanation:** Retailers typically generate SKUs to identify and track their unique product inventory. ### Can SKUs be used to track product variants like color and size? - [x] Yes, each variant can have its own SKU. - [ ] No, SKUs are the same across variants. - [ ] SKUs can't distinguish product details. - [ ] Only if used in conjunction with a barcode. > **Explanation:** Different variants of the same product, such as different sizes and colors, will have separate SKUs. ### What might an SKU typically be composed of? - [x] A combination of letters and numbers. - [ ] Only numbers for simplicity. - [ ] Only letters for clarity. - [ ] Random characters without meaning. > **Explanation:** SKUs typically consist of a combination of letters and numbers corresponding to attributes of the product. ### Where is an SKU most effectively utilized? - [ ] Customer transaction receipts. - [x] Inventory management systems. - [ ] Employee attendance sheets. - [ ] Marketing flyers and brochures. > **Explanation:** SKUs are most effectively utilized in inventory management systems to track products, manage stocks, and analyze sales.

Thank you for diving into the essentials of Stockkeeping Units (SKUs) with us and challenging yourself with the inventory management quiz. Keep advancing your knowledge in efficient business operations!

Wednesday, August 7, 2024
Stockkeeping Unit (SKU)
Stockjobber
Stockroom January 1, 1
Materials Handling January 1, 1
Physical Distribution January 1, 1
Stock-Out January 1, 1
Stockkeeping Unit (SKU) January 1, 1
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Broken Lot January 1, 1
Cash on Delivery (COD) January 1, 1
Closed Stock January 1, 1
Closeout January 1, 1

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