What are SKUs used for?
SKUs are an important tool, not just for manufacturers but for retailers too. But, for manufacturers, it’s more important to have them set up since you’ll need to track:
So, what exactly are SKUs used for?
1. Inventory management
SKUs help you categorize, organize, and track your inventory levels, regardless of if you’re doing your inventory management in Excel or with automated MRP software.
Without SKUs, all of your inventory management efforts will be guesswork.
Once you have your SKUs set up in your business, you can determine the best levels of stock to keep for all your items from gathering information such as sales history, which will save you time and money down the line.
2. Product recommendations
Using and defining SKUs will help your e-commerce store page make better suggestions for customers when they’re shopping because it’ll be able to determine the similarity between products.
So, let’s say you have a customer who is on your website looking at clothes made with 100% cotton. The unique SKUs on products and variants mean your store will be able to make suggestions to the customer by matching similarities within the SKU.
We briefly touched on this, but SKUs on your products are going to help you collect invaluable data on your products, allowing you to analyze:
- It’s popularity
- Seasonal demand
- Cyclic sale trends for different customer segments
This information will allow you to eliminate dead stock, prioritize products, and better plan production cycles.
Ultimately, how you use SKUs all depends on your business’s specific needs. However, you’ll need to use them though, as they’re a necessity for inventory management and analysis in your warehouse, manufacturing, and storefronts.
SKUs will help you establish a common language for you and your staff, so there can be no confusion over your item’s variants.
SKU inventory tracking
What is an SKU? To recap, the meaning of an SKU is stock keeping unit, and you’ve probably already seen a pattern as an SKU is essential for overhauling your inventory management.
However, to take them to the next level, you can track your SKUs so that you can optimize your inventory and maximize profits.
The best way to make use of SKUs is to set reorder points for each of your products. This means that you will only order stock when you need it to avoid stock-outs but also save money and resources.
Your stock levels don’t have to take any more space than they need to while simultaneously always being on hand to manufacture without delay.
There will have to be a bit of time spent on setting this up. But once you do, the amount of time you save in the long run is not even comparable. And once it’s spotless, you can see everything that’s happening with full visibility.
In the same way, you can use visibility with your SKU to prioritize the product variants that you can see are doing well.
With an SKU inventory, each of the variants can be tracked and compared to others.
So, upon inspection, you might see those blue t-shirts seem to be the most ordered across the board. That gives the incentive and understanding to drive sales however you see fit.
Maybe you want to market your other products more.
Or you decide you want to take advantage of this sudden love of the color and do some blue-based promotions.
The potential benefits are clear once you have set up your SKUs, and they won’t all be clear until then.