How to Create SKU Codes to Improve Inventory Tracking

Whether you manage thousands of items or a dozen, assigning each item you carry a unique product numbering code, or stock keeping unit (SKU) code, is vital to keep your inventory management system organized. Using SKU codes is also a requirement for some businesses, such as those who want to list their products on e-commerce sites like Amazon.

Using an automatic number generator or manually assigning short and easily identifiable codes to your products allows you to:

• Input them into a system for search-ability and track-ability
• Speed up data entry, because you’re using short codes versus having to input precise, long product names or descriptions
• Quickly scan reports and easily understand data, when SKU codes relate to product descriptions

Because SKU codes are unique to each business and are not universal, your business can create and use a SKU code system that works best for you. For example, you might use the type of product, the color, or the size of a product in the identifier. There are also free automatic SKU generators found in e-commerce stores that can help you to unify your system and save time in creating SKUs.

If your business is new to SKUs or needs to improve its product numbering system, here is information on how to create SKU numbers that improve the efficiency of your operations.

Learn how to create SKU numbers

Because there are no hard rules with SKU codes, and the methods you use are entirely up to your business, you have endless options available for SKU code creation. This also means that elements can get disorganized quickly. If you’re starting from scratch, you might want to ask for input from your employees who work in your warehouse or with your products. They may have experience working with SKU code systems and will be able to make suggestions on what has worked for them and what hasn’t.

You’ll want to start SKU code creation by determining which features of products are essential to identify in the code. For example, if you sell a large jar of black Spice Room mustard seeds by Indian Spice Trading Company, the SKU code may appear as: ISTC-SR-MS-BLA-L (Indian Spice Trading Company-Spice Room-mustard seeds-black-large). Features in a SKU code may include:

• Manufacturer or brand
• Product name or number
• Category
• Color
• Size

You can get as detailed as you want depending on the products that you offer, but you’ll also want to make the codes as simple and easy to understand as possible so that your team can memorize them and identify items quickly.

Avoid simply using identifiers that a manufacturer has used for your internal product identification. If you switch manufacturers, the code and naming convention will be rendered meaningless, and it can be much more confusing than using a system you create yourself.

SKU code product numbering best practices

It is best to start with a clear SKU code organization process from the very beginning, to make things as clear as possible for your team. Because your business controls SKU management, it’s never too late to change something that is not working, though. Better organization can save valuable time and money long-term. Keep these tips in mind:

• You can use both letters and numbers in your SKU code. This allows you to include all pertinent identifiers in the code, ranging from the manufacturer, to the model, to the color, to the size. Be wary of how you use capitalization that makes characters look like both letters and numbers in your codes, such as a capital “O” and the number “0,” or a lower-case “l” and the number “1.” These types of characters make codes harder to decipher. Also, avoid special characters, since some marketplace programs may not even be able to process them.
• Consistency is key. The ease of using SKU codes decreases when inconsistencies are introduced into the system. For example, say you sell multiple products by Blue Mountain Hiking. If you use “BMH” in one SKU code, but “BlMtnHk” in another, users might get lost or confused as they’re scanning. Two types of products that both use “BMH” in the code and then have differing identifiers make them easier to differentiate. Organize each naming code you use on a spreadsheet, so they can be used for future products, and the spreadsheet can be updated as needed.  If you’re a multi-channel seller, is also recommended to use the same SKU numbers consistently across any marketplaces where you’re selling the same products, so your inventory control system can update the correct inventory counts.
• An ordering format is vital. Just like consistency in the codes you use is important, so is the order in which those codes appear. You’ll want to separate identifiers with dashes, so that the chunks are more easily digestible. A long string of letters or numbers that aren’t broken up can be confusing and difficult to read.
• Use identifiers that intuitively make sense. There’s no need to come up with a secret code to protect your SKU numbers. Using “L” for a large size or “BLU” and “BLA” for blue and black makes the code easier for your employees to learn and use.

FAQs

How can businesses create and use a SKU code system that works best for them?

Since SKU codes are unique to each business and not universal, businesses can create and use a SKU code system that suits their needs. They can incorporate relevant information such as product type, color, size, or other attributes into the identifier. Additionally, free automatic SKU generators available in e-commerce stores can help unify the system and save time in creating SKUs.

How does an SKU enable accurate inventory tracking and analysis of sales data?

By assigning a specific SKU code to each product, businesses can accurately track inventory movements and analyze sales data. This enables businesses to have precise information on product availability, reorder products based on sales data, and gain insights for sales analysis.

What information is typically included in an SKU?

SKUs typically include information such as brand, model, color, size, and other relevant attributes. This allows for a specific code to be assigned to each product variant or item.

What is the purpose of an SKU in inventory management?

SKUs serve the purpose of tracking and managing inventory, as well as identifying products. They provide a unique alphanumeric code assigned to each product in inventory.

Final thoughts

Once you’ve created a SKU code system that works and have assigned SKUs to products, you can import those into your inventory management system. Searching for products is quick and easy when your team knows the SKU codes and naming conventions, and you gain more visibility and control over your inventory.

When you use Zenventory for order management, we’ll help your business identify current SKU inconsistencies and improve your system. Considering how important SKU code creation and management are to your sales, using a smart SKU system can help can keep your business organized and efficient.