What are SKU Codes and How to Create Them

When it comes to keeping track of inventory, one of the most common methods employed is assignment of a Stock Keeping Unit, or SKU code to individual products. An SKU is a unique item, such as a product or a service, as it is offered for sale that embodies all the attributes connected with the item that distinguish it from other items. These attributes might include but are not limited to the brand, size, colour, manufacturer or warranty. Thus, a code that holds all this information about an item gives it a unique stature in your inventory, which means that tracking and recalling a particular item becomes easy. Also, since the code holds all the relevant information about the item, someone adept at reading the code can know everything about the item without having to go and check ‘the side of the box’.

There are a few other systems that incorporate codifying products for tracking purposes, like the Universal Product Code, or Global Trade Item Number, which utilize barcodes to identify with unique products in a database. The key factor with SKU is that a retailer gets the freedom to create his/her own SKU codes and incorporate them in the inventory system without having to adhere to a larger tracking scheme. With SKU, a retailer retains the flexibility of controlling the size of their inventory, changing manufacturers or wholesalers without the hassle of a system overhaul. Of course, the key here is that the SKU codes must be well created. That is, the user must be able to access all the relevant information about the product without confusion or misinterpretation through the code. So how does one go about creating good SKU codes? Let us find out through the 5 hard tips that follow.

How to Create Good SKU Codes

1. Make Your Own SKU Code

Try not to incorporate the manufacturer/wholesaler code within your SKU code. It might seem like a good idea to just pick up the manufacturer’s code and add a few prefixes/suffixes to create your own, but it’s a bad practice. In this case, you would have to completely overhaul your coding system in case you change your manufacturer or wholesaler. It’s too much hassle.

2. Decide What You Want Your Code to Say

Decide what information you want to access through the SKU code. There is no point loading the code with information you are never going to require. The main purpose for creating SKU codes is that you have an identifier with which you can visualize a unique product. Hence, use enough information for a successful identification of an item, but no more. For example, if the year of manufacture is irrelevant for a particular set of items, do not incorporate it in the code. It will just eat up space and would be prone to misinterpretation. Store this information under the product description tag, instead.

3. Use the Cascade Method

Create codes that are logically decipherable. For example, if you are planning to sell electronic equipment from different brands, first create a cascade chart for your information. How a cascade chart works is – start off by taking the largest set of information about your item first – in this case, ‘Electronic Equipment’ – and call it set ‘E’. Then you take the next most relevant subset, for example, ‘Laptops’. Let us call that set ‘L’. Then you ask, what brand does this laptop belong to? What model does it belong to? And so on. Keep adding attributes till you can uniquely identify that particular laptop in your warehouse using only the code. Stop adding the questions as soon as this unique identification is possible.

4. Fonts and Characters

Beware of confusing characters, or homoglyphs – O and 0, I and l, etc. It might sound trivial, but the font you use to print your codes play an important part in making sure that the reader is not confused. Our advice is to use bold, serif fonts that clearly define most characters without confusion. Try not to use symbols in your SKU codes. Even though it might seem like a good idea to use the ‘/’ to create breaks within your code, you don’t want Excel auto formatting the numbers, confusing them with a date. Other characters like $ and @ are too confusing and cause formatting errors all the time.

5. Use an Inventory Management System

Use an inventory management system to store and track your SKU codes. It’s just a better way of doing things. Most of your work becomes automated, your tasks are simplified and your formats are saved and notated for future reference. As compared to storing your codes on Excel files, which are prone to corruption, damage and confusion, inventory management systems give you a cleaner, more efficient perspective at the state of your warehouse.

Thus, we come to the end of our advice on SKU codes and how to create them. SKU codes are such an important part of your inventory management that you have to take proactive steps to create them efficiently. For further queries and assistance, get in touch with Browntape. We are India’s leading online inventory management system providers, and are always happy to help. Good luck with your sales!

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