SKU (Stock Keeping Unit)
SKU stands for Stock Keeping Unit and is a unique identification code used to keep track of items in a warehouse or retail system. Each individual product variant for example a blue T shirt in size medium has its own SKU, which distinguishes it from the same T shirt in red or size large.
Rackbeat November 28, 2025
Why is SKU important
An SKU number works like a personal ID number for your products a unique identifier that ensures every item and variant can be found, registered, and tracked without confusion. When SKUs are used correctly, they form the foundation of structured and efficient inventory management.
SKUs are important because they help you
1. Keep precise control of inventory levels
With unique SKU codes you avoid mixing up products and you can always see exactly how many units you have of a specific variant.
2. Avoid picking errors and double registrations
When each item has its own SKU number it becomes much easier for warehouse staff to pick and pack the right products and the system helps prevent the same item from being registered twice.
3. Make stocktaking much easier and faster
Inventory counting becomes far more efficient because you can scan or register the SKU and instantly see which item you are handling without guessing or checking manually.
4. Analyze sales data by variant and make better purchasing decisions
When SKUs are used consistently you can easily dive into data on colors sizes or models and gain insight into what sells best and what should be adjusted in your assortment.
5. Automate reordering and purchasing management
By linking SKUs to minimum stock levels and reorder rules you can set up your system to automatically alert you when an item is running low.
6. Improve the customer experience
When your inventory data is accurate and up to date thanks to SKUs you avoid out of stock situations and incorrect deliveries and that builds trust with your customers.
How are SKUs used in practice
An SKU number is not a random code but a structured combination of information that helps you identify a product’s characteristics. SKUs are typically created and managed in a company’s WMS (Warehouse Management System) or inventory management system and can either be generated automatically or created manually based on a fixed structure.
An SKU number can be built from
- Product category for example TSH for T shirt or BUK for trousers
- Color for example BL for blue RD for red
- Size or dimension for example M for medium 40 for shoe size
- Batch or serial number especially relevant for food electronics or traceability requirements
- Supplier or manufacturer code if you stock the same item from multiple suppliers
Examples of SKU structure
SKU | Meaning
TSH-BL-M | T shirt blue medium
BUK-SRT-32 | Trousers black size 32
SNE-WH-40-NK | Sneakers white size 40 Nike
The benefits of a well thought out SKU structure
- Fast searching and filtering in your system find the exact variant you are looking for
- More precise and detailed reports gain insight into sales performance at variant level
- Scalability add new products without losing overview
- Easier integration with webshop and order management consistent data across platforms
In Rackbeat you can create SKUs manually or let the system generate them automatically when you work with product variants. If you add both colors and sizes to a product Rackbeat generates an SKU for each combination. You can also use a warehouse scanner to quickly identify items and optimize your entire product flow.
Want to get full control of your SKUs and your inventory once and for all
If you are ready for better structure fewer errors and more overview in your inventory management and want to use SKUs as an active part of that then let us show you how Rackbeat can help.
Book a no obligation online meeting with one of our advisors and get a personal walkthrough of how you can work smarter with your products inventory and processes: