This is the first entry in a multi-part series. The other entries are What is a UPC code, How to issue SKUs and UPCs and Why you need your own bar codes. All told, this topic was too lengthy to post as one entry.
A SKU (pronounced skew) is a stock keeping unit used for inventory and costing purposes. While the focus of our discussion will be the use of SKUs to track finished goods we send to retailers, SKUs can also be used internally to keep track of fabrics, inputs and even machines if you have that many. SKUs are helpful to manage fabric inventory whether it’s used in house or sent out to a contractor.
There is a tracking hierarchy:
- A style number is the basis of a SKU (intended for finished retail goods).
- A SKU is the (indirect) building block of UPC codes.
Style numbers, SKUs and UPC codes can also be defined as being under internal or external control. There is crossover obviously but internal means you have control over defining the number and its use is mostly internal. External means you largely can’t define the number and its use is shared by external parties. Examples:
- Style Number: Internal. You assign a number to the style.
- SKU: Internal. You assign a number based on criteria (below).
- UPC: External: You are assigned a code unique to your business.
There is a lot of debate as to the information a SKU must include; the definition is squishy. Everyone seems to agree a SKU must include the style number and the color. Others say it must also include the size. Still others say it must also include the season. I’m past debating the advantages and disadvantages to each argument. If it matters to you, I would include the size in the SKU but you are not wrong if you choose to do otherwise.
Next: What are UPC codes?