Understanding SKU (Stock Keeping Unit)

Understanding SKU (Stock Keeping Unit)

A Stock Keeping Unit (SKU) is a unique identifier for each distinct product and service that can be purchased. It is crucial for inventory management, helping businesses track and manage their stock effectively.

Importance of SKUs

SKUs help businesses organize inventory, streamline order processing, and improve customer service. They enable accurate tracking of stock levels, sales data, and product performance.

Strategies to Optimize SKU Management

1. Standardized SKU System: Implement a standardized SKU system to ensure consistency and accuracy in inventory tracking.
2. SKU Rationalization: Regularly review and rationalize SKUs to eliminate redundant or slow-moving items.
3. Inventory Management Software: Use inventory management software to automate SKU tracking and management.
4. Detailed Product Information: Ensure each SKU includes detailed product information to improve order accuracy and customer satisfaction.

Implementation Example: Online Retailer

An online retailer with a large product catalog tracks SKU performance and finds inefficiencies in their system. They implement a standardized SKU system and use inventory management software to automate tracking. They also conduct regular SKU rationalization to eliminate redundant items and improve overall inventory efficiency. These changes result in more accurate inventory tracking and improved order processing.