SKU

A SKU (Stock Keeping Unit) is the unique, internal alphanumeric code a company assigns to each sellable product to identify it unambiguously. Unlike a standard barcode, the SKU is defined by each company according to its own logic and reflects the attributes that distinguish one variant from another: brand, model, color, size, flavor, pack format or capacity.

Every distinct combination is a distinct SKU. A blue T-shirt in size M and the same T-shirt in size L are two different SKUs, even though for the customer they are "the same product." That granularity is what lets you know exactly how much stock there is of each variant, where it is and how fast it sells.

The SKU is the smallest unit of control on which inventory, replenishment, warehouse picking and supply chain traceability rely. That is why it is a central part of what Trazzo organizes and tracks throughout the physical movement of goods.

How a SKU is built

A SKU is not a random number: it is usually a code structured in segments that encode product attributes, so that someone on the team can "read" it without looking it up in the system. A typical pattern at an apparel company might be TEE-BL-M-SS, where each block represents category (T-shirt), color (blue), size (M) and season (SS, spring/summer). Each company decides its own logic, but good practices agree on a few principles: it should be short but readable, it shouldn't start with a zero (systems tend to drop it), it shouldn't use ambiguous characters such as the letter "O" and the number "0" or the "I" and the "1," and it should be stable over time (a SKU is never reused for another product, even if the original has been discontinued).

The number of active SKUs defines a business's operational complexity. A convenience store handles a few hundred; a supermarket, tens of thousands; a pharmacy or a wholesale distributor, several thousand with critical attributes such as lot and expiration date. The larger the catalog, the more important it becomes to manage SKUs well, because every coding error multiplies into shortages, overstock and inventory discrepancies.

Why it matters for the business

The SKU is the key that connects the physical with the digital. Without a unique code per variant, you can't answer basic operational questions with precision: how many units are left of each pack format, what is about to run out, what hasn't moved in months, what needs to be restocked right away. It is the basis for core metrics such as inventory turnover, stockouts and ABC analysis of the catalog.

A concrete case from Argentina: a consumer goods distributor in Buenos Aires that sells the same soft drink in a 500 ml bottle, a 1.5 L bottle, a 2.25 L bottle and a 6-pack manages four different SKUs for a single commercial "product." If it merged them into one, it would lose visibility into the fact that the 6-pack is running out while the single bottle is overstocked, and it would replenish poorly. A well-defined SKU is what allows the inventory system, the sales team and the warehouse to speak the same language.

SKU, barcode, GTIN and UPC: they are not the same

This is the most commonly confused point. The SKU is internal and defined by the company; the others are external standards that allow different companies to recognize the same product across the entire supply chain. They coexist: a product usually has its internal SKU and a GTIN barcode printed on the package.

The operational difference: two different stores can use completely different SKUs for the same product (each with its own coding), but both share the same GTIN, because that number travels with the product from the manufacturer. That is why the SKU is used for internal management, while the GTIN is used to identify the product at any point in the supply chain.

In the United States, the standard barcode on consumer products is the 12-digit UPC (a GTIN-12), while large retailers also assign their own internal item numbers, in effect their SKUs, to every product they carry. As a result, the supplier's SKU, the retailer's SKU and the UPC often coexist for the same item, and maintaining an item cross-reference is a routine part of onboarding as a vendor with a large retail chain.

Common mistakes when managing SKUs

• Duplicate SKUs: two codes for the same product (for example, entered twice with different spellings) inflate the catalog and split the real stock in the system.
• Under-coding variants: using a single SKU for different colors or sizes makes it impossible to know which variant is missing.
• Reusing an old SKU for a new product: it breaks the sales and traceability history.
• "Smart" SKUs that are too long: 20-character codes packed with attributes end up being fragile; many companies opt for a short, sequential SKU and keep the attributes in separate system fields.
• Not having a single source of truth: if each department (sales, warehouse, e-commerce) maintains its own SKU list, discrepancies are inevitable.

The SKU as the foundation of traceability

Only once each product has a stable SKU can the next layers be stacked on top: linking lot and expiration date, recording picking movements in the warehouse, tracking the order in real time and reconstructing the full journey of the goods in the event of a complaint or a product recall. The SKU is the foundation: if it is poorly defined, everything built on top of it inherits the error.