SKU Management

SKU (Stock Keeping Unit) management is the practice of creating and maintaining unique identifiers for every distinct product variant a business sells. A well-structured SKU system enables accurate inventory tracking, sales analysis, and operational efficiency.

SKU system components:

• SKU format: Structured code encoding product attributes (e.g., SHT-BLU-M = Shirt-Blue-Medium)
• Naming convention: Consistent rules for how SKUs are created
• Variant tracking: Separate SKUs for each size, colour, and style combination
• Barcode mapping: Linking SKUs to scannable barcodes
• Cross-reference: Mapping internal SKUs to supplier SKUs and marketplace identifiers

SKU naming best practices:

• Start with a category or brand prefix
• Include key differentiating attributes (colour, size, material)
• Keep SKUs concise (8-12 characters)
• Avoid characters that cause confusion (0 vs O, 1 vs l)
• Use hyphens or consistent separators
• Document the convention for team reference
• Plan for future expansion (leave room for new attributes)

SKU management challenges:

• Proliferation: Too many SKUs creating operational complexity
• Cross-channel mapping: Different identifiers across marketplaces
• Bundle tracking: Managing component-level inventory for bundles
• Variant explosions: Colour x size x material combinations
• Discontinuation: Properly retiring old SKUs
• Data quality: Maintaining accurate SKU data across systems

SKU analysis for business decisions:

• Sales velocity by SKU (fast vs. slow movers)
• Margin analysis by SKU
• Inventory turnover rate per SKU
• Stock coverage (days of stock remaining per SKU)
• ABC analysis (categorising SKUs by revenue contribution)
• Dead stock identification (SKUs with no sales)