SKU numbers are crucial for accurately tracking inventory and products across the supply chain while tracking sales and ensuring a good customer experience. By using SKUs, businesses can improve their operations and drive profitability. Here are a few reasons a retail store needs SKUs:
SKUs are essential for accurate inventory tracking, allowing you to review in-stock, low, or out-of-stock items. In addition, if you run a hybrid retail business, you can track in-store inventory levels and warehouse inventory to help you determine when to order more. This can be especially useful for omnichannel businesses that utilize strategies like BOPIS to attract customers.
SKU numbers make it easier for warehouse employees to locate items that need to be shipped, streamlining the order fulfillment process while reducing the potential for errors. Using SKU numbers facilitates picking, packing, and shipping, increasing efficiencies in an e-commerce business.
By using a SKU system, brick-and-mortar, and online retailers can track sales to gain insights into product performance and identify which products are selling well and which aren't. With real-time data, business owners can make data-based decisions about product development, production, and retail marketing. For instance, you can determine whether audience segmentation can improve sales and identify types of products different audiences might be most interested in.
A product's SKU number can facilitate identifying each product in a catalog. Because SKUs can contain information about product characteristics like size, color, brand, and style, businesses can use them to find products in a warehouse using inventory management software.
An SKU number provides a business with key information about a specific product, allowing businesses to identify exactly which items need to be reordered from suppliers. This effectively prevents inventory shortages or stockouts that can affect the customer experience.
In addition, this more efficient reordering prevents a business from over-ordering from a supplier, reducing their spending on potentially unnecessary inventory items.
Creating your own SKU system can also improve customer service efforts. For instance, if a customer needs help with a specific product, a customer service representative can use the SKU number to locate information. In addition, SKUs make it easier to track orders, process returns, and handle complaints.
In addition, product SKUs can improve your marketing efforts by enabling you to send customers personalized product recommendations based on the items you have in stock. These recommendations can help you eliminate excess stock while catering to the specific needs and preferences of your audience.
How to generate SKU numbers
Generating SKUs can improve your operations, increasing efficiency while driving profitability. Remember, SKUs are unique to the retailer, so they should be informative, unique, and scalable.
The easiest way to create SKU numbers is by using your inventory management system. However, your software can't do everything for you. Here are the steps to create SKUs that uniquely identify products in your inventory.
Decide on SKU components
Your SKU can be as simple or complex as you want it to be as long as it supports your inventory management initiatives. Decide what information your SKU should contain, which may include product type, brand, size, color, or any other unique identifiers.
Develop a standardized format
Once you've determined your SKU's characteristics, you can develop a standardized format. This format will keep all your SKUs consistent, eliminating warehouse confusion. You can choose any type of format, such as product type > brand > size > color.
Create alphanumeric codes
After determining your SKU components and format, you can begin creating alphanumeric codes for each element in your SKU. For example, you might use TSHRT for a t-shirt. On the other hand, if you're selling a particular brand, such as IBM, you might use IBM to keep it simple. These codes should be easily understood by anyone who will be working with your inventory.
The shorter the code, the better. Eventually, your staff will memorize the components, format, and individual codes to create new SKU numbers when necessary. In addition, they'll easily identify and track inventory items across locations, warehouses, and stores.
You should also invest in training and creating resources to ensure all staff members understand how to use the SKU system, especially if they create SKUs or identify products in inventory.
Keep it unique