SKU Numbers are an incredibly important part of tracking items in a retail setting and making decisions relating to what products people are interested in.

However, many retail managers and business owners aren’t up to speed on exactly what they are or how they’re used.

Here’s a breakdown of what you should know about SKU numbers.

Why SKU Numbers Are Important

So, what is SKU number?

SKU (Stock Keeping Unit) numbers are codes consisting of numbers and letters located above bar codes that give useful information about a product. They are usually up to 12 characters long and are often confused with the UPC numbers located below bar codes, which typically contain manufacturer information.

SKU numbers are ordered in such a way that they reveal information about a particular product. The different parts of an SKU number track different characteristics related to a price tagged item, such as what size it is, what item category it belongs to, and how much of a particular item is in stock.

These numbers are very useful for tracking inventory, but their greatest advantage lies in what they can reveal about trends in retail sales, such as what items are selling, when items are selling, and what items need to be ordered from manufacturers.

How To Develop An SKU Number System

To create an effective SKU system, you’ll first have to decide how to categorize items. Depending on how complex and uniform your inventory is, you can either make descriptions of items incredibly broad or highly specific. You’ll need to find an overall balance between easy organization and intricate levels of specificity.

You’ll also need to take into account how many items you have overall so that you don’t accidentally reuse codes. In order for the information from SKU codes to be viable, each individual item with a code needs to be 100% unique. Otherwise, you’ll end up double counting things, which can completely ruin what are normally crucial statistics.

Additionally, be sure to keep track of what each section of code means and what entire code segments are supposed to reference by writing them down onto (or typing them into) a singular, easy to reference document. You can have all the entirely unique codes you want, but unless you know what they mean, they won’t be particularly useful.

SKU Number Tips

When developing an SKU code, make sure to place them in descending order of specificity; in other words, put the broadest categorization first, like supplier, and the most specific categorization last, like what color an item is.

From a practical standpoint, it’s good to avoid letter and number combinations that look too similar to each other to prevent confusion.

For instance, the letter “o” should never be used alongside the number “0.” Also, don’t make SKU numbers too complicated or else you’ll have a hard time keeping track of everything. More intricate codes means you get more information, but that doesn’t necessarily mean the information is useful.

If you find yourself having too much of a difficult time creating and organizing your own SKU numbers, then there are services out there, like Lightspeed, which can assist you in that process.

Putting SKU Knowledge to Use

SKU numbers have the potential to completely change your retail strategy. With each individual item that is inventoried or sold, you gain a complex list of very relevant information for your retail operation.

If you haven’t already, developing a well-organized SKU system is a definite must.

Review Everything You Should Know About SKU Numbers.

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