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Here's why you definitely need to use SKUs to manage your inventory
Here's why you definitely need to use SKUs to manage your inventory

A starter guide to SKUs and the importance of them.

Jeffrey Meese avatar
Written by Jeffrey Meese
Updated over a week ago


Stock Keeping Unit, or SKU, is a unique product code often used to track inventory. It commonly consists of an alphanumeric combination, sometimes inclusive of dashes. SKUs are used to differentiate products, especially highly similar ones like products of different sizes (eg unsalted butter in blocks of 250g or 500g) or different colours. Generally, companies have their own specific set of rules when creating SKU numbers for their product and the same product can have different SKU numbers in different companies.

The Importance of the SKU

As the definition suggests, no two products should have the same SKU number in the same company. Hence, using SKUs will help you distinguish one product from another quickly and efficiently. This will reduce the frequency of error during the picking and packing stage of products, thus increasing process efficiency. Furthermore, customers will also be able to identify the correct products to order, thereby minimising the risk of ordering the wrong product.

Additionally, using SKUs in your inventory management strategy simplifies the process of calculating inventory and financial metrics such as inventory turnover, order fill rate, and profit margin calculations.

SKUs in OrderEZ

In OrderEZ, each product is tagged to a unique SKU. You cannot use the same SKU for two different products.

If you are using the Xero integration, the SKU in OrderEZ should correspond to the Item Code in Xero.

Tips on generating SKUs

Can't wait to start tagging your products? Before you dive in, here are some tips on how to generate SKUs:

1. Keep it simple and consistent, yet uniquely yours

SKUs are not just a string of random characters; they should provide some details about the product, such as category, brand, or even units of measure. That being said, you also want to avoid having long SKUs as it may become difficult for users to read. You want to have a good set of rules to construct your SKU numbers and apply the rules across all your products.

2. Avoid using special characters and confusing characters

While this sounds insignificant, you should not use special characters such as !, @, # and so on, as these characters may not be recognised in certain software and may cause formatting issues. Characters like numeric 0 and letter O, numeric character 1, lower-case L, and upper-case I also look very much alike in certain fonts and hence, should be avoided unless within a clear context.

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