The warehousing and shipping industry has its fair share of acronyms to stand in for commonly used terms. As the owner or manager of a business that needs to move products from storage to customers, it’s useful for you to know one of the central terms that help make order fulfillment go as smoothly as possible: The stock keeping unit, or SKU. So, what does SKU mean? Read on for the definition and its significance for your business operations.
WHAT IS A SKU?
At WSI, our 3PL professionals routinely refer to charge term definitions such as SKU, meaning “stock keeping unit.” For a quick SKU definition, all you need to know is that a SKU is an alphanumeric code (i.e., a code with letters and numbers) used to distinguish one product from all others.
Typically, you will find SKUs printed on product labels for easy identification. Then, it’s a simple matter of scanning the SKU to track the movement of inventory and maintain a tally of what you have in stock. If you’re interested in understanding more about the intricacies of warehousing, you might want to read about different types of warehousing.
You can create your own method for naming SKUs since they apply only to the products your company sells. In other words, you are responsible for how to name each item, so stick with a naming scheme that fits your product lines.
For example, a large blue cotton shirt could have a stock keeping unit of “SCO5-BLU-LRG” while a small blue shirt might use “SCO5-BLU-SML.” Polyester shirts could use “SPO” instead of SCO at the front of the SKU to set cotton apart from polyester garments in your inventory.
WHO USES STOCK KEEPING UNITS?
Manufacturers and distributors employ SKUs to track how items are moving through the supply chain. Beyond the warehouses and fulfillment centers, employees scan stock keeping units in retail settings (online and in brick-and-mortar stores). If you’re looking to delve deeper into the world of logistics, our guide on what is logistics outsourcing can provide further insights.
Consumers may also use SKUs to look up products online for reviews and price comparisons.
THE BENEFITS OF STOCK KEEPING UNITS
What is a SKU in shipping? When you understand the answer, you’ll see that stock keeping units are an effective way to monitor your product lines. With SKUs, you can:
- Quickly compare the popularity of products
- Standardize how you refer to each product
- Learn which products are running low so you can replenish supplies
THE DIFFERENCE BETWEEN SKUS AND UNIVERSAL PRODUCT CODES
It’s not uncommon for companies to mistake a shipping SKU for a universal product code (UPC) identifier.
A stock keeping unit is a special identifier that a company creates internally to monitor each of the products it sells. In contrast, a UPC is a universal code that is always the same for a given product, no matter which company happens to sell it.
Say you sell small, medium, and large feather pillows that are made by another company. That manufacturer would apply a specific UPC code for each of the three units. However, for your internal use, you might apply three SKUs when selling this manufacturer’s pillows.
TRUST WSI TO HANDLE YOUR 3PL NEEDS
Our experts have more than a half-century of experience providing third-party logistics and shipping services, making WSI the preferred 3PL supplier for companies large and small. Our network transports huge volumes with optimized processes for greater efficiency and transparency. If you’re curious about the different services we offer, check out our comprehensive guide on third-party logistics.
You can rely on us to use your products’ SKUs to ensure each unit moves where it is supposed to go, according to schedule. To learn more about our facilities and capabilities or to consult with one of our professionals, please contact WSI today.