The first product to ever feature a UPC barcode on its packaging was Juicy Fruit chewing gum, back in the 1970s. Since then, the practice has become commonplace in retailing, particularly with the rise of automated inventory management systems. While people tend to use the terms SKU and UPC interchangeably, the reality is they are quite different and serve different (though somewhat similar) purposes.
Here’s a guide to using UPCs vs SKUs, and when each is most appropriate.
UPC Fundamentals
The letters UPC comprise the initialism for the term, “Universal Product Code”. Employed by product manufacturers, they remain constant to a specific item throughout its shelf life. Where SKUs are unique to each seller or warehouse, UPCs are unique to manufacturers. When properly formatted, a UPC consists of 12 numeric characters, usually topped by a barcode.
Because each UPC must be unique to a certain product, a regulatory agency provides them. Further, they must be purchasedand registered to avoid duplication. If you sell electronics as an online retailer, odds are you’ll never need to generate a UPC. However, if you’re producing your own line of devicesand selling them to other retailers, you will need to purchase a UPC for each of your products.
SKU Fundamentals
An anagram for the term “Stock Keeping Unit”, a SKU is used specifically to manage inventory within a store or a warehouse. Their primary purpose is to help keep track of items sold, as well as the different variations of an item. Their formatting is generally unique to each individual company employing them. In fact, retailers are encouraged to employ unique SKUs to keep their inventory systems accurate. With strategic coding, a SKU can indicate the color, size, style and the date of acquisition of a product. They can also be used to indicate cost, condition and where the product can be found in a warehouse, or on a store shelf. Most guides recommend keeping them to eight alphanumeric characters. As we noted earlier, SKUs can vary from retailer to retailer, as they are primarily used to manage individual inventories.
SKU Best Practices
- Maintain them for internal use only.
- Keep SKUs simple so employees can readily understand them.
- Keep them short enough to be easy to use, but just long enough to convey vital information.
- Start with letters to make them readily discernable and easier to sort in spreadsheets. This will also serve you well during receiving, stocking, and picking.
- Avoid reusing a SKU for a different product.
- Always start with a character other than zero. Eliminate characters or symbols such as the lowercase L and the letter O as they can be misread as the numbers one and zero.
- Use both numbers and letters.
- Manufacturer’s serial- or part numbersshould be avoided for your SKUs as they are often too long and cryptic. Further, if you switch suppliers, or the manufacturer changes the stock number, errors will be introducedinto your system.
- Avoid including item numbers. Doing so creates problems such as making your SKU designations longer and more complicated. Reserve item numbers for use with the product descriptions on your site.
Said simply, UPCs help manufacturers keep track of their products regardless of the store they’re in. SKUs help retailers and warehouses keep track of the products introduced to their systems. Further, SKUs can be configured to identify products all the way down to size, color, cost and location. Both are useful tools, however UPCs and SKUs are most appropriate at different stages in a product’s life.
