A Stock Keeping Unit (SKU) is a unique alphanumeric code assigned to each distinct product in a company's inventory to track and manage stock levels efficiently. SKUs serve as internal identification tools that help businesses monitor inventory movement, assess sales performance, and determine stock replenishment needs. Unlike Universal Product Codes (UPCs), which are standardized across the industry, SKUs are created by individual companies and can include details about product attributes such as size, color, style, brand, or storage location.
SKUs are essential for effective inventory management, allowing businesses to track specific product variants separately and make informed decisions related to purchasing, pricing, and stock allocation. A typical SKU might contain abbreviated information about the product’s category, brand, size, and color, creating a logical system that staff can easily understand and utilize. Well-designed SKU systems enhance operational efficiency, reduce errors in order fulfillment, and generate valuable data for sales analysis and inventory forecasting.