What a SKU is and what it is for

A SKU is a code for one distinct type of item that a business sells, buys or tracks. The letters stand for "stock keeping unit". People say it as "es-kay-you" or "skew".¹

Here's the whole idea in one line. You count stock by SKU, not by what the item is called.¹

What a SKU covers

• One code, one item type. A SKU stands for a distinct type of item for sale, purchase or tracking, plus every attribute that sets it apart from other types.¹
• Attributes count. For a product, those attributes can include the maker, description, material, size, colour, packaging and warranty terms.¹
• Small differences matter. Size and colour are on that list. So a small blue jumper and a large blue jumper are two item types, and each needs its own count.
• Counting works per SKU. When a business records its stock, it counts the quantity it has of each unit, or SKU.¹

The word has two meanings

• The unit. Strictly, a SKU is the unit of measure in which the stock of a material is managed.¹
• The code. People also use SKU for the identifier itself, sometimes shown as a barcode for scanning and tracking.¹

Day to day, most people mean the code. That's how this site uses it.

SKU or product name?

• The name is for people. Customers read it on a shelf or a web page. You can reword it without changing what the item is.
• The SKU is for your records. Orders, stock counts and purchase lists match on it. Two items with the same name but different sizes need different SKUs.
• A name can be vague. "Cotton tee" could be a dozen items. A SKU points at exactly one item type.

Who decides what a SKU looks like?

• You do, mostly. SKUs are not regulated or standardised, so there's no official format to follow.¹
• You can keep the supplier's code. When items arrive from a vendor, a business can keep the vendor's SKU or create its own.¹
• Pick one approach and stick to it. Mixed styles make lists hard to read. How to build a SKU numbering system covers ways to do it.

How a SKU differs from a GTIN

• A GTIN is a global standard. The Global Trade Item Number is an identifier for trade items, developed by the international organisation GS1.²
• A SKU is a business's own code. Wikipedia describes GTINs as standard, global tracking units, and says SKUs are distinct from them.¹
• Each trade item type gets its own GTIN.² Your SKU for the same item can be anything you choose.

The next page, SKU, barcode, UPC and GTIN, sets out how the pieces fit together.

Where else the word turns up

• In inventory software. The SKU is usually the field that links a stock record to a scan or an order. See how inventory software uses SKUs and barcodes.
• In software services. Cloud service providers such as Google Cloud Platform present different purchasable variations of a product or service as SKUs.¹

A quick check on your own codes

• Does each distinct item type have exactly one SKU?
• Does any SKU point at two different items?
• Can a new team member say what an item is from its name alone, and find it by code?

If the answer to the first or third is no, or the second is yes, the codes need tidying before the range grows.