In the United States, only 63% of businesses have inventory accuracy at a high level. This means that 37% of businesses are experiencing problems with inventory accuracy, which can have a serious impact on their ability to maintain revenue and customer experience.
One of the main causes of inventory inaccuracy is the constant change and update of products and quantities.
To address this issue, implementing SKU-based inventory management has proven to be beneficial for many businesses, enabling more precise control over stock levels and allowing them to allocate more time to focus on other aspects, such as sales.
OCIMI will discuss the meaning of SKUs, how they work, and the effective implementation of SKUs in your business in this article.
What is SKU?
The term "SKU" stands for "Stock Keeping Unit," which is a series of symbols made up of either letters or numbers that are used to group comparable products together based on attributes like shape, function, etc. It's a product code, to put it simply.
SKU has become popular all over the world and is a useful tool to help you quickly search, manage products easily and scientifically when the product catalog is expanding and diversifying.
Why is SKU important? The effects of SKU in warehouse management
SKU is considered more necessary than barcodes in inventory control. SKU contains unique symbols of both letters and numbers for each product category. The dispatcher can simply look at the SKU to identify the type of product by character and easily read them without having to scan the system like barcodes.
In addition, businesses are not limited in the number of SKUs, regardless of how large your product catalog is.
Importance of SKU
SKU are internal codes that businesses use to efficiently manage their inventory and instantly identify products.
SKU facilitate the differentiation of several product versions.
SKU make it easier to identify the same product across many warehouse locations.
Reduce the possibility of loss or running out of products when managing your inventory.
When selling through many channels, SKU numbers serve as the product connecting point between each channel.
Standard SKU Rules for E-commerce
Manufacturer's Name (or Brand Name)
Product Description: A brief description of material (cotton, khaki, silk, velvet, etc.); shape (long, short...)
Purchase Date: Including the day, month, year (using only the last 2 digits)
Storage Location
Size
Color
Condition: New or Used
Example of an SKU for sneakers. Each SKU is unique to the product, comprising the season, product name and type, followed by size and color:
Fall 2020 Collection, All-Star Sneaker, White, Size 9 = F20-SN-AS-W-9
Fall 2020 Collection, All-Star Sneaker, White, Size 10 = F20-SN-AS-W-10
Fall 2020 Collection, All-Star Sneaker, Pink, Size 9 = F20-SN-AS-P-9
Assigning SKUs by category streamlines initial implementation, but leveraging specialized systems and scanning devices fosters long-term accuracy and efficiency by minimizing human error in SKU management.
Optimizing Inventory Flow with Smart SKU Management:
Strategic Storage: Warehouse layout plays a vital role in avoiding both overstocking and stockouts. Recognizing that some SKUs have higher demand than others, establish separate reorder points based on real-time sales data. For example, if size 8 of Product A sells out faster than size 4, prioritize its replenishment to ensure consistent stocking and prevent customer frustration.
Dynamic SKU Management: For high-performing SKUs, consider expanding the range to cater to evolving consumer preferences. However, predicting and managing SKU fluctuations in real-time can be tricky. Excess or insufficient stock poses risks, and incomplete sales data across platforms can negatively impact the customer experience.
SKU Arrangement in the Warehouse: SKUs are not just used to track inventory, but they can also be used to help you set up efficient picking strategies in your warehouse. For example, if sales data shows that certain SKUs are often picked together, then placing those SKUs in the same shelf area can save your warehouse workers a lot of walking time.
Professional fulfillment management solution in the Vietnam market
Vietful has successfully developed and provided E-commerce Order Fulfillment System, combining 2 OMS & WMS solutions to support unified management and optimize the operation of order processing on the same platform to solve all difficulties in completing e-commerce orders across channels. Vietful has an understanding of the needs of the majority of businesses operating fulfillment and have plans to take control of their logistics.
At the moment, Vietful fulfillment management software offers an extensive range of specific features and management capabilities for processing e-commerce products, including:
Connects with leading carriers Viettel Post, GHN, GHTK, Ninja Van, ...
Monitors the entire process, all products are encoded to help workers easily find the right ones, helping the packaging to be accurate and complete, without shortages or damage when reaching the hands of customers.
Increase the order processing activities during peak seasons such as major sale events by arranging a reasonable, simple, and accurate process.
Optimize speed: 65 - 150 orders/hour/employee
Store inventory up to millions of SKUs of hundreds of retail and e-commerce partners.
Optimize storage space.
Manage and evaluate the performance of over 1,000 warehouse staff each day according to KPI.
Manage multiple warehouses, multiple employees, unlimited quantity, no additional fee
OCIMI is a consulting partner and exclusive implementation unit of the Vietful Order Processing Solution in Vietnam. OCIMI is proud to have a team of professional staff with over 10 years of experience in the field, who can help your business optimize the fulfillment process in e-commerce comprehensively.
By applying optimization methods in a comprehensive fulfillment system, businesses can build a flexible, efficient fulfillment process that best meets the needs of the increasingly competitive e-commerce market
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