From Order to Delivery: The Role of SKU Numbers in Logistics

Mar 22,2024
Industry News
Are you still troubled by the SKU number during warehousing or logistics transportation? Affects inventory management efficiency, leading to order processing errors and reduced customer satisfaction

Have you ever encountered that when two or more products use the same SKU number, it leads to chaotic inventory management and the inability to accurately track the purchase, sale and inventory of each product. Not only does this impact the efficiency of inventory management, it can also lead to order processing errors and reduced customer satisfaction.

What is a SKU?

In the warehousing and logistics industry, SKU (stock keeping unit) is a key concept used to identify and track the smallest sales unit of inventory.

sku number

what is sku number?

Each product or material is assigned a unique SKU number, which is usually a combination of letters and numbers. The purpose of SKUs is to easily track and manage products, including stock levels, pricing and sales information. Retailers, wholesalers, and manufacturers use SKUs to manage products, streamline operations, and improve the accuracy of warehouse management systems.

What information does the SKU contain?

The information encoded in a SKU may vary depending on the business and its specific needs. Sku number on package usually contains product-specific information such as brand, style, color, size, material, etc. Also includes inventory information such as location, quantity, and status.

SKUs can be custom structured to contain any relevant information, but are generally designed to be easy to read and scan for efficient inventory management.

What common problems with SKU numbers are waiting to be solved?

Duplicate SKU number

Due to system errors or human factors, the same SKU number may be assigned to different products multiple times, leading to confusion and errors.

When two or more products use the same SKU number, it is impossible to accurately track the purchase, sale and inventory of each product. Not only does this impact the efficiency of inventory management, it can also lead to order processing errors and reduced customer satisfaction.

SKU number is not standardized

Some companies may lack unified SKU numbering specifications, resulting in inconsistent number formats, lengths or naming, making identification and management difficult.

SKU number confusion

When processing orders or managing inventory, similar or confusing SKU numbers may lead to incorrect shipments, misalignment, or confusion.

Difficulty managing large numbers of SKU numbers

For large warehousing and logistics companies, managing a large number of SKU numbers may become complex and difficult, requiring more efficient management methods.

SKU number scalability

As your business expands and product lines increase, the SKU numbering system may need to be more scalable to accommodate the growing number and variety of products.

High cost of manual operation

Some SKU numbering systems may require a lot of manual operations and manual entry, increasing labor costs and the risk of errors.

Difficulty integrating with other systems

The SKU numbering system may be difficult to effectively integrate with other systems (such as order management, inventory management, etc.), resulting in out-of-sync information or data redundancy.

Using third-party warehousing service providers can solve this type of problem to a certain extent. Third-party warehousing service providers usually have professional inventory management and logistics systems that can help merchants standardize the use and management of SKU numbers.

How to create a valid SKU?

Decide what information needs to be tracked and define the level of detail. Choose structure, consider order, hierarchy, and blending. Use consistent rules to keep your SKUs short, readable, and scannable. Document system to share SKU structure and coding rules with employees. Review and update regularly to maintain consistency and avoid frequent changes.

How to solve SKU confusion in warehousing and logistics

Establish a standardized SKU numbering system

Through professional systems and technical means, we ensure that each product has a unique SKU number. Develop unified SKU numbering specifications to ensure that the format, naming and management of numbers are unified and standardized to avoid confusion and errors.

Maintain the accuracy of SKU numbers and products

Regularly check and update SKU numbers and product information to ensure the accuracy and consistency of the information.

Use automation technology

Use automation technology (such as barcodes, RFID, etc.) to replace manual operations and improve the accuracy and efficiency of SKU numbering.

Implement SKU management system

Introducing a professional SKU management system to help enterprises manage and track a large number of SKU numbers and improve management efficiency.

Strengthen training and supervision

Train employees on SKU number management and operation, strengthen supervision and review, and reduce the occurrence of errors and confusion.

Continuous optimization and updates

Continuously optimize the SKU numbering system and continuously improve and update it to adapt to business development and changes.

Third-party warehousing service providers can effectively solve common problems with SKU numbers in the warehousing and logistics industry and improve logistics efficiency and management levels. Merchants themselves also need to strengthen the management and maintenance of SKU numbers and work closely with warehousing service providers to jointly ensure the accuracy and effectiveness of SKU numbers. At the same time, merchants also need to promptly adjust and optimize SKU numbering strategies according to changes in market and customer needs to improve inventory turnover and customer satisfaction.

The difference between SKU, UPC and EAN:

SKU: A code used within a company to track a specific product or item in stock.

UPC: Universal Product Code, a standardized barcode used to scan products at the point of sale.

EAN: European Article Code, similar to UPC, used for product identification internationally.

While SKU, UPC, and EAN are all used to identify products, SKU is a code used within a company to manage inventory, while UPC and EAN are standardized barcodes used to scan at the point of sale.

What are the benefits of using SKUs?

Improve inventory management

SKUs make it easier for companies to manage inventory and avoid overstocking or understocking.

Improve efficiency

By providing a standardized way to identify products, SKU reduces the risk of human error and improves overall efficiency.

Enhance customer experience

SKUs quickly provide information about a product, improving the customer experience and reducing the likelihood of customer dissatisfaction.

Improve supply chain management

SKUs help better manage the supply chain, reduce the risk of inventory shortages, and improve supply chain efficiency.

Enhance data collection and analysis

By tracking sales and inventory data by SKU, companies can gain valuable insights into product performance and make data-driven decisions.

how to get a sku number?

The main ways for warehousing companies to obtain SKU numbers are as follows:

Provided by merchants

Merchants will pre-assign a unique SKU number to each product before sending it to the warehousing company for storage and management. This number is usually generated by the merchant based on its own product coding rules or system. When the warehousing company receives the goods, it will record and use this SKU number for inventory management and order processing.

Warehousing company generation

Some warehousing companies provide SKU number generation services. When a merchant does not have its own SKU numbering system or chooses to use the warehousing company's system, the warehousing company will generate a unique SKU number based on the characteristics, attributes and other information of the product. This ensures that each item has a clear identification in the warehousing company's system.

The system automatically generates

With the development of technology, some advanced warehouse management systems (WMS) have the function of automatically generating SKU numbers, such as chinadivision. These systems can automatically generate unique SKU numbers based on the name, specification, color, size and other attributes of the product, combined with specific encoding rules. This approach not only improves efficiency but also reduces the possibility of human error.

Provided by third-party platforms

In some cases, merchants may sell goods through third-party e-commerce platforms or sales platforms, and these platforms usually assign a unique SKU number to the goods. When warehousing companies cooperate with these platforms, they can directly use the SKU numbers provided by the platforms for inventory management and order processing.

No matter which way to obtain SKU numbers, warehousing companies need to ensure that each number is unique for accurate inventory tracking, order processing and data analysis. At the same time, warehousing companies also need to maintain good communication with merchants to ensure that both parties agree on the use and management of SKU numbers to avoid confusion and errors.

About the Author: Limi

About the Author: Limi

Limi is a content marketing expert at ChinaDivision, helping businesses and e-commerce sellers navigate the complexities of international shipping by providing actionable tips and comprehensive guides on logistics, shipping, and cargo transportation.