Hi manish
A Stock Keeping Unit, or SKU (pronounced either as an acronym (IPA: /ˈskjuː/) or as an initialism (/ˌɛsˌkeɪˈjuː/) “S–K–U”) is a unique identifier for each of the distinct products and services that can be ordered from a supplier. Usage of the SKU system is rooted in data management and enabling the merchant to systematically track their inventory, such as in warehouses and retail outlets.
SKUs are often assigned and serialized at the merchant level. Each SKU is attached to an item, variant, product line, bundle, service, fee, or attachment. For example, an item may be a can of soft drink with an item identifier number of 1234. If that item is held in stock in the warehouse and two retail stores, it is said that there is one item and three SKUs to be maintained. An item in two different bin locations in the same geographical location is not seen as two SKUs as they are managed as a single unit.
SKUs are not always associated with actual physical items, but are more appropriately billable entities. Extended warranties, delivery fees, and installation fees are not physical, but have SKUs because they are billable. All merchants using the SKU method will have their own approach to assigning the numbers based on regional or national corporate data storage and retrieval strategies. SKU tracking varies from other product tracking methods which are controlled by a wider body of regulations stemming from manufacturers or possibly third-party regulations.
Successful inventory management systems assign a unique SKU for each product and also for its variants, such as different flavours or models of product or different bundled packages including a number of related products. This allows merchants to track, for instance, whether blue shirts are selling better than green shirts.
Example SKU system
An imaginary product, called a widget, has a part number of 1234. It is packed 20 to a box, and the box is marked with the same part number 1234. The box is then placed in the warehouse. The box of widgets is the stock keeping unit (SKU), because it is the stocked item. Even though the part numbers are interchangeable to mean either a widget or a box of widgets, the box of widgets is the stocked unit. There may be three different colors of widgets; each of these colors will be a separate SKU. When the product is shipped, there may be 50 boxes of the blue widgets, 100 boxes of the red widgets, and 70 boxes of the yellow widgets shipped. That shipment would be said to have been a shipment of 220 boxes, across three SKUs.
Another example is a product given an article number 4321. Within the last 2 years Vendor X has been making article number 4321. Vendor X is going out of business, yet the plans for making article 4321 still belong to the selling company. The selling company now has two companies making the same product during the transition phase. Instead of tracking variants by maker, it uses UPCs, and possibly "color" or "dye" or similar. It will still hold the same article number for daily, weekly, monthly, quarterly, and yearly profit margins. SKUs link UPCs from the vendor to the retail company. A single SKU can have many UPCs. Makers use UPCs to see if it is worth making green when red accounts for 99% of the market. Selling companies use SKUs to see which company performs better with the same item.
Another example is if a particular product has an MRP of x & there is a revision in price, say the price now becomes y. Then x & y will have to be stocked separately & billed separately so they become two different SKUs.
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