SKU vs UPC - They Aren't The Same Thing
SKU number should not be mistaken for UPC code. UPC stands for universal product code, which is a standardized 12-digit number to identify a product. Each manufactured good is given a UPC, which is issued by the Global Standard Organization to the manufacturer of that good. All wholesalers and retailers purchasing that item must follow its UPC accordingly.
While both SKUs and UPCs give information when being scanned, UPCs only consist of numbers and cannot be interpreted by humans. Therefore, retailers prefer to establish their custom SKUs that make sense for internal tracking.
Below are the key differences between SKU and UPC numbers:
Three tips to consider when creating your SKU's
Your SKU format should align with the types of products they represent. Apparel SKU's need to be flexible and account for many different styles, colors, and size. Cosmetics may only have a few product types, but need to account for various shades or formulations. Be sure to set your SKU's up with these variations in mind. A few tips below are helpful when going through this process.
Start with a top-level identifier
The beginning of each SKU should represent a top-level identifier in 2-3 characters. This is the most general classification that a product belongs to. Top-level identifiers can be a product type, category, or both. Based on the identifier, you can quickly identify the most basic information about the product.
Assign unique identifier in the middle section(s)
Next, take the middle section(s) of the SKUs to add unique features, such as size, color, subcategory to your item. Think about which product attributes are important to you and make sense when organizing your products.
- Using a mix of Letters and Number for these sections to make them easier to recognize and convey.
- Use at least 2 digits and usually no more than 3 or 4. That will give you 10-1000 variations
- If you will have a lot of variations in colors that are similar consider using numbers. That way you don't have to try and come up with letter combinations to represent 10 different shades of red.
Complete the SKU with a sequential number
For products that may have new versions, flavors, or iterations it may be useful to add a sequential number to finish your SKU, like 001, 002, 003. It identifies older items versus newer items in your inventory and lets you know which items have been around longer and should be prioritized for things like promotions.
The example below is for apparel and has 4 sections.
In this example a SKU could be: SH-102-RED-05 and would represent a Large Red Cotton Polo.
The following example could be used for cosmetics. In this instance we will combine some variable in the middle to create a combination section indicating both Category and Color.
In this example a SKU could be: LP-1012-101 and represent the first formulation/version of the Dark Red Lipstick.
A few things to remember
Keep in mind these best practices to make a well-structured SKU number systems:
Keep it simple: Although you can go as detailed as you want, it’s best to choose a few most important traits you want to include in the SKUs. Avoid extremely long SKUs since it’ll be hard to remember and interpret. The individual codes for each trait should be short and able to reflect the trait.
Begin with the most important variant: After you’ve selected your prioritized traits, decide which is the is most important to place at the beginning of your SKU codes. One suggestion is to start from the most general identifier and work down to the bottom, like our example above starting with category.
Avoid starting SKU with a zero: This is because computers interpret a zero at the beginning as nothing. Therefore, it reads the SKU “01234XYZ” as “1234XYZ”. To prevent this error, don’t start your SKUs with a zero. Instead, choose a prominent trait that you can interpret in the alphabet.
Try to avoid letters that can be confused for numbers: If possible, limit using the letters that look like numbers to avoid confusion. For instance, the letter “O” can be mistaken for number zero, and the letter “I” may look like number one.
Don’t take the exact manufacturer numbers for your SKU: Different manufacturers have distinct ways to build their product codes. If you’re purchasing inventory from multiple manufacturers, following various SKUs systems will be overwhelming. It is much better to develop your own SKU system for easier management, since customized SKU codes can better reflect the traits you want to track and meet the unique needs of your business.
To wrap up
SKU's are extremely important for both you and Elevate to easily identify and track your products. Using a formalized SKU format will help you as your business grows and make it much easier for you to make sense of what you have in inventory when viewing reports in the WMS.
After you've created your SKU review the Elevate Packaging and Labeling Guidelines for properly labeling individual products and master cases. Elevate can help you to create your own document to provide to manufacturers and suppliers to ensure smooth and accurate receiving when product arrives.