One of the key details in managing an e-commerce or any other omnichannel sales business is the SKU code; a fundamental element for ensuring efficiency in inventory management, preventing cataloguing errors, avoiding stock-outs, and reducing order delays.
In this article, we will delve into the meaning of the SKU through a concrete example and explore best practices for using it strategically, integrating it into digital processes and order management solutions.
SKU Acronym: definition and differences from EAN/UPC
SKU is the acronym for Stock Keeping Unit, meaning “stock keeping unit”. It is an alphanumeric code assigned to each individual product (or product variant) within a company’s inventory. The meaning of the SKU therefore goes beyond a simple label, as this code serves to precisely identify each item, distinguishing, for example, between the sizes of the same t-shirt.
It is important not to confuse the SKU code with other standard codes such as EAN (European Article Number) or UPC (Universal Product Code). While these are standardized global codes used for scanner reading at retail points of sale, the SKU is an internal code, customizable and designed to reflect the organizational logic of a company’s warehouse or catalog.
Why the SKU is crucial for inventory management
Proper use of the SKU code is essential for effective warehouse management. When each product has a unique and consistent SKU, staff can quickly locate it, monitor stock levels, and instantly update item statuses.
The presence of well-structured SKUs also makes it easier to conduct detailed analyses of sales performance. It is possible to identify the most requested variants, detect seasonal trends, or segment the offering based on demand.
How to create an effective SKU Code: structure and SKU example
The creation of a SKU code should follow a logic that reflects the inventory structure and business priorities. Each element of the SKU code communicates information; an SKU example can be TSH-M-BLK, where the letters identify a t-shirt (TSH), size M, and the color black (BLK).
To achieve better results in warehouse tracking and organization, it’s important that SKUs are consistent, unique, and easily interpretable by staff. It is not recommended to use ambiguous symbols, redundancies, or random combinations, as this helps reduce errors in warehouse management. Additionally, a SKU code should be sufficiently flexible to adapt to future catalog expansions without losing clarity.
Integration of SKUs into order processing
The effectiveness of the SKU is not limited to the inventory phase, but extends across the entire operational chain, starting from order processing. When an order is received, identifying products through SKU codes allows the acceleration of picking, packing, and shipping. In this way, lead times are reduced and delivery accuracy is improved.
The Hubrise’s technological solutions enable you to centralize information from various sales channels—such as e-commerce, marketplaces, and physical retail outlets—ensuring integrated, real-time management of SKUs. Thanks to automatic synchronization between systems, you can avoid overlap errors, double sales, and misalignments between the virtual catalog and actual warehouse availability.
The integration of SKUs into the systems used in the warehouse also facilitates communication among the various stakeholders involved in the logistics chain, from warehouse operators to sales managers, as well as suppliers and customers.
Common errors and technological solutions to avoid them
One of the most frequent errors is the disorganized or inconsistent creation of SKUs. Using codes that are too similar to each other, or assigning the same code to different products, can cause confusion and compromise the entire management system. Other problems arise when the SKU is not updated after catalog changes, or when it is not properly integrated into digital systems.
Another critical aspect concerns scalability. In a constantly evolving and expanding business, the structure of the SKU must be able to support the company’s growth—with new products, collections, and variants—without having to overhaul the existing system. Hubrise supports this need by offering flexibility and customization in code management, in line with the specific dynamics of each business.