Streamline Inventory Management with a SKU System

Streamline Inventory Management with a SKU System

Table of Contents

  1. Introduction
  2. What is a SKU system?
  3. Benefits of using a SKU system
  4. Step 1: Start with a top-level identifier
    • Choosing the most important thing to indicate
    • Examples of top-level identifiers
  5. Step 2: Use middle numbers for unique identifiers
    • Identifying subcategories
    • Examples of unique identifiers
  6. Step 3: Finish with a sequential series of numbers
    • Why sequential numbering is important
    • Examples of sequential numbering
  7. Step 4: Adding SKU numbers to your system
    • Integrating skus into point of sale or inventory management
    • Manual vs automated methods
  8. Step 5: Creating barcode labels
    • Importance of scannable skus
    • Using barcode generators
  9. Conclusion

Creating a SKU System for Your Products

Product codes, also known as SKUs, are a crucial component of any inventory management system. SKUs allow businesses to create unique identifiers for their products, making it easier to track and manage inventory. In this article, we will discuss the importance of implementing a SKU system and provide a step-by-step guide on how to create one for your business.


Managing inventory can be a complex task, especially for businesses with a large number of products. Without a proper system in place, it can be challenging to keep track of stock levels, organize products, and provide accurate information to customers. This is where a SKU system comes into play.

What is a SKU system?

A SKU (Stock Keeping Unit) system is a method used by businesses to assign unique codes to their products. These codes can be customized based on the specific needs of the business, allowing for easy identification and organization of products. A well-designed SKU system enables businesses to streamline their inventory management processes, improve efficiency, and provide better customer service.

Benefits of using a SKU system

Implementing a SKU system can offer several advantages for businesses. Here are some key benefits:

  1. Efficient inventory management: With a SKU system in place, businesses can easily track and manage their inventory levels. This helps in reducing stockouts, avoiding overstock situations, and optimizing reorder quantities.
  2. Improved organization: SKUs enable businesses to categorize and classify products based on various criteria, such as department, color, size, or supplier. This makes it easier to locate and retrieve products when needed.
  3. Enhanced accuracy: SKUs provide a unique identifier for each product, reducing the chances of errors in inventory management. By scanning SKUs, businesses can quickly update stock levels, track sales, and reconcile inventory.
  4. Streamlined operations: A well-implemented SKU system can simplify various operational processes, including ordering, receiving, and restocking. By having standardized codes for products, businesses can ensure consistency and efficiency across their operations.
  5. Improved customer service: SKUs facilitate faster and more accurate order fulfillment. With a well-organized inventory and SKU system, businesses can quickly locate products, confirm availability, and provide accurate delivery estimates to customers.

Step 1: Start with a top-level identifier

The first step of creating a SKU system is to determine a top-level identifier. This identifier should indicate the most important information about a product at a glance. For example, if you run a clothing store, you may want to use the top-level identifier to indicate the department or store section where each product belongs.

By assigning a specific digit or set of digits to the top-level identifier, you can easily categorize products and ensure proper organization. This helps employees quickly understand where a product should be located and simplifies the inventory management process.

Examples of top-level identifiers for a clothing store:

  • "01" for tops
  • "02" for bottoms
  • "03" for accessories

Step 2: Use middle numbers for unique identifiers

Once you have determined the top-level identifier, you can move on to assigning unique identifiers to each product. These unique identifiers can represent subcategories of products, such as size, color, or type. They should be chosen based on what makes the most sense for your business and products.

For example, if we consider the example of a green blouse in a clothing store, you may want to indicate the size and product type as the middle numbers of the SKU. This would make it easier for customers and employees to quickly identify and locate the product.

Example SKU for a small green blouse: "01-SM-06"

Step 3: Finish with a sequential series of numbers

To complete the SKU, you need to add a sequential series of numbers at the end. These numbers should be in a sequential order and can be used to track product variations, such as different seasons or releases.

By maintaining a sequential numbering system, you can easily identify the order in which products were added to your inventory and track any changes or updates over time.

Example SKU for a small green blouse in spring season: "01-SM-06-001"

Step 4: Adding SKU numbers to your system

Now that you have created your SKU numbers, it's time to add them to your point of sale (POS) system or inventory management system. If you are using a digital system, there is usually a built-in feature to input SKU numbers for each product.

By integrating SKUs into your system, you can track products in real-time, monitor inventory quantities, and gain insights into product performance. This not only helps in managing inventory effectively but also enables better decision-making based on accurate data.

If you are using a manual method or a pen and paper system, ensure that each product is entered with its corresponding SKU number. This will help in tracking products and maintaining accurate inventory records.

Step 5: Creating barcode labels

To make the checkout process and inventory accounting easier, it is essential to create scannable barcode labels for your products. Barcode labels can be generated using barcode generators available online or through your POS system if it has a built-in barcode feature.

By attaching barcode labels to your products, you can streamline the checkout process, reduce manual errors, and improve inventory accuracy. It enables quicker product identification and updates inventory records in real-time.


Implementing a SKU system is a valuable strategy for businesses looking to improve their inventory management processes. By creating unique product codes and utilizing them in your point of sale or inventory management system, you can streamline operations, enhance accuracy, and provide better customer service. A well-designed SKU system helps businesses organize their inventory effectively and make data-driven decisions to optimize stock levels, reduce costs, and improve overall efficiency.

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