Overview

SKU (also known as stock keeping unit) is a unique identifier for the product that is sold at the Point of Sale. It is used as the identifier to track the sales, inventory and purchase orders for a product.

There are various mechanisms to generate these final SKUs, each with a different level of sophistication required to maintain and benefits. Below are the common approaches for SKU generation.

SKU Creation Algorithms

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This is the simplest way to create a unique identifier for a product. In this mechanism, each size level variant of the product is given a unique identifier for the product.

Example: 123456

Pros

  • Simple to generate

Cons

  • Requires a central system to generate the SKU

  • Doesn't give you any information on the product

  • It makes it hard for an external system to generate this identifier, since everything relies on a central authority to generate the identifier

Smart SKUs

In this approach, a SKU is generated based on the different attributes of the product. The most common approach for Smart SKUs is to concatenate style name, color name and the size name.

Example: delancey-white-xs

In this approach, `delancey` is the style name, and this SKU is defining the white and xs variant of this style.

Pros

  • Simple to generate

  • Very explicit on what the product is

  • Can be generated by an external system

Cons

  • Non numerical SKU, which could require another numerical identifier for some other systems

  • It makes it hard for an external system to generate this identifier, since everything relies on a central authority to generate the identifier

Smart Numerical SKUs

In this approach, a SKU is generated based on the different attributes of the product, but each attribute is mapped to a number for SKU generation.

Example: 120214123

This SKU represents more detailed information. Below is a way to look at it in a more extended form

120-21-4-12-3, where

120: is the style #

21: is the year the style is introduced in

4: is the quarter the style is introduced in

12: is the color code

3: is the size code (say M)

This example is meant to be directional, and you can use the same attribute to number mapping for different attributes that you might want to track.

Pros

  • Simple to generate

  • Numerical SKU, so will be supported by most retail-tech systems

Cons

  • Requires a specific level of familiarity to interpret what the SKU means

  • Requires a central system to generate the unique style identifiers

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