Article: Importance of Stock Keeping Unit

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  • Topic: Retailing, Global Trade Item Number, Identifier
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  • Published : November 14, 2010
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Stock-keeping unit
From Wikipedia, the free encyclopedia
| This article does not cite any references or sources. Please help improve this article by adding citations to reliable sources. Unsourced material may be challenged andremoved. (July 2007)| A stock-keeping unit or SKU (pronounced either as an acronym, /ˈskjuː/, or as an initialism, /ˌɛsˌkeɪˈjuː/) is a unique identifier for each distinct product and service that can be purchased. SKU use is rooted in data management, enabling the company to systematically track its inventory or product availability, such as in warehouses and retail outlets. They are often assigned and serialized at the merchant level. Each SKU is attached to an item, variant, product line, bundle, service, fee, or attachment. SKUs are often used to refer to different versions of the same product. For example, a retail store carrying Guitar Hero 3 might have six SKUs, two for each of the three platforms—one with and one without a guitar controller. SKUs are not always associated with actual physical items, but are more appropriately billable entities. Extended warranties, delivery fees, and installation fees are not physical, but have SKUs because they are billable. All merchants using the SKU method will have their own approach to assigning the SKU system based on regional or national corporate data storage and retrieval strategies. SKU tracking varies from other product tracking methods which are controlled by a wider body of regulations stemming from manufacturers or possibly third-party regulations. Successful inventory management systems assign a unique SKU for each product and also for its variants, such as different versions or models of product or different bundled packages including a number of related products. This allows merchants to track, for instance, whether blue shirts are selling better than green shirts. Other entity tracking methods, with varying regulations, are Universal Product Code (UPC),European Article Number (EAN), Global Trade Item Number (GTIN) and Australian Product Number (APN). Contents [hide] * 1 Example SKU systems * 2 SKUs & warehouse distribution * 3 See also * 4 References| -------------------------------------------------

[edit]Example SKU systems
Example 1:
An imaginary product, called a widget, has a part number of 1234. It is packed 20 to a box, and the box is marked with the same part number 1234. The box is then placed in the warehouse. The box of widgets is the stock keeping unit (SKU), because it is the stocked item. Even though the part numbers are interchangeable to mean either a widget or a box of widgets, the box of widgets is the stocked unit. There may be three different colors of widgets; each of these colors will be a separate SKU. When the product is shipped, there may be 50 boxes of the blue widgets, 100 boxes of the red widgets, and 70 boxes of the yellow widgets shipped. That would be a shipment of 220 boxes, across three SKUs that may be designated 1234B, 1234R, and 1234Y. Example 2:

A product is given an article number 4321. Within the last 2 years Vendor X has been making article number 4321. Vendor X is going out of business, yet the plans for making article 4321 still belong to the selling company. The selling company now has two companies making the same product during the transition phase. Instead of tracking variants by maker, it uses UPCs (Universal Product Code), and possibly "color" or "dye" or similar. It will still hold the same article number for daily, weekly, monthly, quarterly, and yearly profit margins. SKUs link UPCs from the vendor to the retail company. A single UPC can have many SKUs. Makers use UPCs to see if it is worth making green when red accounts for 99% of the market. Selling companies use SKUs to see which company performs better with the same item. Example 3:

If a particular product has a MRP (Maximum Retail Price) of x and there is a...
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