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Why you Should use SKU to Track Inventory in retail

SKU codes are one of the fundamental elements for controlling and managing stock in the warehouse. A stock-keeping-unit (SKU) is an 8 letter scannable barcode that identifies each product in a company, and they are very useful when it comes to tracking and managing inventory for different reasons that will be clarified throughout the article.

What exactly is a SKU code?

SKU codes are unique combination of numbers that contain characteristics regarding the price, product details, and manufacturers. For example, in a clothing company, one of their SKU codes might define the characteristics of a black jacket in size 36 of a certain model. The purpose of these codes is to record the characteristics of each product stored in a particular location.

Benefits of using SKU codes

Basically, once a SKU code is scanned, we can identify the location of the item within the company store locations, and sometimes even inside the store. You might find answers regarding questions such as: What retail location is the product in? Is it still in the warehouse? Where in the store are these purple palazzo pants?

Scanning SKU codes can also show us the availability of units of that item, and of similar items within the requested location. As a result, very much time is saved, customer service drastically improved, and sales increased. Lastly, the accuracy of inventory availability, and the easiness and immediateness in which inventory information in obtained, allows for more accurate sales forecasts.

These are some of the reasons why SKU codes are especially beneficial in big companies with overwhelming amounts of inventory.

Where are SKU codes used?

SKU codes are generally used in warehouses, but they can also be used in:Catalogs

  • Retailers
  • Online stores or marketplaces
  • Article dispatch centers

What is the difference between SKU and UPC codes?

SKUs are often mistaken by UPC codes. They are both used as a way to identify a product and manage inventory availability, but they differ in the fact that UPC codes are used to identify a product within a brand, while a SKU code is used to identify a product within a company. In other words, a HUGO BOSS jacket might be sold in its HUGO BOSS stores, but also in department stores such as Macy’s.

There will be different SKUs for both Macy’s and HUGO BOSS stores. If it wasn’t for SKU’s, it would be very difficult for each company to manage and track BOSS products within their own companies.

To sum up in bullet points, these are the differences between SKU vs UPC codes:

  • A SKU code, is a specific number assigned by the store or company to keep a record of the inventory availability and also the price of all the products: it’s a tool used for internal mechanisms.
  • An identical product may have different SKUs if sold by different companies, while the UPC number is considered a universal code.
  • A SKU is an 8-digit number and the UPC comes in 12-digit codes.
  • Characters and letters are not used in UPC codes, only numbers are used. On the other hand, a SKU code is a string of alphanumeric characters.


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