Benefits and Challenges of SKU Numbers For Manufacturers

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Stock keeping units (SKU) are unique identification codes used in the manufacturing industry to label and organize products. They usually come in alphanumeric form and include elements that can help identify a product such as brand, model, color, year of fabrication, etc. These codes are used internally and are different from serial or batch numbers, as they are used to track an individual product.

Using SKUs comes with many advantages, as it allows businesses to manage their stocks while keeping everyone aligned and synchronized more efficiently with a common reference point. It allows one to analyze data more accurately and make the decisions that drive improved revenue and achieve significant business results. Let’s dive in deeper into each of these benefits and then go through some of the challenges that go into the use of SKU numbers for manufacturers, as well.

Manage stock

When each of your products has its unique identification code, it’s much easier to keep your inventory organized. The SKUs are an essential part of inventory management and are used to track products through the different production and selling stages. Especially when you handle large volumes, you need to make sure your warehouse is organized, and you can always track down a product. This can also become helpful when handling any shortages or production errors that require you to identify very specific products in your inventory.

Keep everyone aligned

It’s not only your inventory that needs to be organized and in sync. Staff need to be informed of any changes and they should be able to track products smoothly. Using SKUs allows for a form of common language to be used so you can ensure everyone is looking at products in the same ways. 

Communication will be much easier, as well as finding answers to any pressing questions. Being on top of things at all times will help your staff stay more relaxed and productive at work while being able to focus on more important tasks.

Analyze performance

When you want to perform analyses on your inventory SKUs make your job easier because they make all of your products easily trackable and categorized. So, if you need to zoom in on a certain batch or model you can do that by filtering out based on the identification codes. Analyzing sales performance helps you identify trends and improve your overall business strategy, which is always a goal businesses strive to reach.

Boost profits

All of the above benefits lead to this main target of any business, improving revenue and profits for all stakeholders. When your inventory is well managed you can more efficiently organize your products and make sure you are not exposed to shortages or overstocking. Having an easy way to analyze your data since it’s easily identifiable through SKUs will allow you to be more efficient and spot opportunities for improvement.

Of course, using SKUs comes with challenges as well, since you need to make sure the system you are using works and that everyone is on board and able to use it. It can easily get out of control if you don’t follow best practices, such as making sure SKUs are consistently generated and used, unique, clear and descriptive. 

Adopting software that includes an advanced SKU generator will save you from human errors and the challenge of keeping the codes up to date. With the right software, you will be able to keep track of all your products and seamlessly integrate with other systems.