Knowing what products are in stock and which need to be re-ordered is an important part of managing your product catalog.
Keeping your product catalog organized with a consistent system will ensure that you can tell customers what products are available quickly and easily.
What is a SKU?
SKU stands for Stock Keeping Unit, SKU’s are used to identify and track the product they are assigned to. You can assign unique SKUs to each of your products, so it is easy to keep inventory, search for products, and reference the SKU as a consistent product identifier on invoices and receipts.
Understanding how to use product variants and attributes to create unique product SKU’s will help keep your product catalog organized. Because many products come in a variety of combinations for color, size, price or other variants, the unique product SKUs are crucial for tracking which products are in stock.
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How can SKUs help you organize your product catalog better?
SKUs allow you to create a unique identifier for each product so you can tell exactly which product the SKU is referencing. To demonstrate how this works, we’re going to use the example of a business that sells one type of suitcase that comes in different colors and sizes.
1. Identify the parent product category
If a business sells only one type of suitcase that comes in different colors and sizes, then the term suitcase will be the parent product. Parent products are their own category in a product catalog and represent the highest level of the product category for that item.
2. Identify different product variations for each parent product
Suitcase variations help identify individual products. Each variation is made up of product attributes. In our example, the suitcases only have two attributes. One is color: purple, brown, or yellow. The second attribute is size: small, medium, or large. By adding attributes such as purple and small to your parent category of suitcase, you create a product variation of a small purple suitcase.
3. Enter product details into your Centralized Product Catalog
Once you’ve determined the product variations, you can assign the attributes to your Centralized Product Catalog based on how many there are. For your suitcases, you assign product attributes ‘size’ and ‘color’ by clicking on them.
4. Assign SKU’s to each product variant
Once you have determined all the unique variations of your products, you can assign unique SKU numbers to each combination. This is a key step to track which products are available in your product catalog because the SKU will ensure that each product attribute is accounted for and trackable.
For example, a small purple suitcase could be assigned the SKU: 01SMPU where 01 = Suitcase, SM = Small, and PU = Purple. By looking at this SKU, you can quickly identify exactly which product it is referencing.
5. Begin tracking inventory
Once all your products have SKU’s assigned to them, you can be confident that your inventory information is reliable. This can improve your customer service because you’ll always know exactly which products are in stock and available. Now, when a customer asks for a small purple suitcase, you can find it by the SKU, adjust your stock numbers for small purple suitcases, and better manage your overall inventory.
By applying a SKU to each product variant, you’ll know the inventory of each unique product combination. When a customer buys one of the five small purple suitcases that were in stock, you immediately know there are now four left. This also helps you know when it is time to re-stock your inventory and order more products.
The risk of not using SKU’s to track inventory
If you do not have SKUs assigned based on individual product variants, then tracking inventory to an individual product level becomes more difficult.
Going back to the example, you know you have 47 suitcases in stock because you track the number of the parent products. However, because the SKU numbers don’t extend to the product variants, if a customer asks for a small, purple suitcase, you will not know if you have it or how many you have. Not tracking SKUs to the product variant level can result in a product catalog having inaccurate, or incomplete information. This can affect your customer service if you’re not able to accurately answer customer questions about which items are in stock.
Technology can do the hard work for you
Thankfully, there are inventory management systems that can do all the hard work of tracking product quantities for you. Using a business platform, like Helcim, that has a centralized product catalog for retail and online stores and is backed by an inventory management system, makes it easy to add product variant SKUs and manage your inventory.