SKUs

Stock keeping units (SKUs) are alphanumeric codes used to identify and track items in inventory. An SKU encodes attributes such as product family, style, size, color, and packaging, enabling precise tracking across warehouses and channels. SKUs are internal and not standardized across companies; their length and structure vary.

SKUs support replenishment, ordering, pricing, and sales analytics, enabling fast picking, accurate stock valuation, and linkage to product master data such as supplier and cost. Each SKU corresponds to a specific item variant, so a single product family may have many SKUs for different sizes or colors.

SKUs are often paired with barcodes for scanning at point of sale and in warehouses. Barcodes may encode a universal code like a UPC that maps to an internal SKU.

SKUs are created and retired by product management or procurement and stored in ERP or inventory systems with attributes such as price, lead time, location, and stock levels. They should be stable, but new SKUs are created for design changes or regional variants.

Best practices include a consistent coding convention, documented attribute order, avoiding changes to existing SKUs, and automating generation from product attributes. Regular audits help prevent duplicates and improve accuracy when integrated with barcodes and warehouse systems.

Example: TS-RED-LG-001 denotes a red, large T-shirt in a particular line.

Limitations: SKUs are not standardized across the industry and depend on internal data quality and system integration.