What is SKU tracking? SKU level vs unit level explained

SKU stands for stock keeping unit. It is a short code that identifies one exact version of a product that you make or sell. If two products differ in a way that matters to you or your customer, such as size, colour or fabric, they should have different SKUs.

A SKU is not a barcode, and it is not a product name. The name is for people, the SKU is for your systems and your team, and the barcode is a printed way for a machine to read either of them. You can have a SKU without a barcode, but a barcode is only useful if it points to something.

SKUs matter in a factory because everything else hangs from them. The production list, the pick list, the stock count, the price list and the customer order all need to agree on what one thing is. If they do not, errors multiply.

SKU tracking is recording how many of each SKU you have, and where they are, as they are made, moved and shipped. At its simplest it answers: how many of SKU X are in stock right now?

That count can be kept in a notebook, a spreadsheet or a system. What changes between methods is how accurate the count stays, and how much work it takes to keep it so.

There are two main levels at which you can track, and the choice shapes everything else.

A good SKU scheme is readable, consistent and does not need a lookup table. Someone new should be able to guess roughly what a SKU means by looking at it.

Build them from parts

Join short codes for each attribute that matters, always in the same order. For example, a made to order chair might use a product code, a size and a colour:

The same pattern works for a bed (base size, headboard style, fabric colour), a cabinet (width, finish, handle) or a sofa (seats, arm style, cover).

Rules that keep a SKU list healthy

• Use capital letters and numbers only. Avoid spaces and punctuation that confuse scanners and spreadsheets.
• Keep the order of parts identical across the whole range.
• Make each code short, but not so short that it is cryptic.
• Never reuse a SKU for a different product, even after you stop selling the old one.
• Do not put information in the SKU that changes, such as price or supplier.
• Write the scheme down on one page and keep it where the team can find it.

Do not create a SKU for every possible combination before you need it. Add a SKU when a real order asks for it. Otherwise your list fills with products nobody has ever made.

When to create a new variant and when not to

Ask one question: would a mistake here cause a wrong product to go out? If a different colour would be returned, it needs its own SKU. If a variation is purely cosmetic and never matters to the customer or the factory, you may not need to separate it. Be strict about the first group and relaxed about the second.

This is the heart of the topic. The two approaches answer different questions.

SKU level tracking

You track how many of each SKU exist. Ten grey standard chairs are ten identical things, and the system records “10 of CHR_STD_GRY”. You do not care which chair is which, only that there are ten.

Unit level tracking

You track each physical item on its own, usually by giving it a unique serial number or barcode. The system records “this particular chair, made on Tuesday by this person, belongs to order 1234 and is in rack B04”.

Neither is better in every case. They suit different businesses, and many factories use both: SKU level for bought in components, unit level for the finished product.

You can usually get by with SKU level tracking when your products are identical, made in volume and sold from stock. Unit level starts to pay off in the following situations.

• You make to order, so each item belongs to a named customer or retailer from the start.
• An order contains several pieces and you must be sure all of them are present before loading.
• You need to prove what was made, when, by whom and with what check, for example for a complaint or a warranty claim.
• You supply retailers who want to see the progress of their own orders, piece by piece.
• Items are high in value or easily mixed up, such as the same product in slightly different fabrics.
• Returns come back and you need to know exactly which item it was and where it went.

A quick test: if someone asks “where is my order?” and you can only answer by walking the floor and looking, unit level tracking would help. If you can answer from a list, you probably do not need it yet.

Unit level tracking is also what makes mistakes visible at loading. If a piece for retailer A is scanned onto retailer B’s van, a unit level system can notice. A SKU level system, which only knows that one more grey chair has left, cannot.

Once you decide to label items, you must decide what to print. Two formats cover almost every factory.

Code 128

A traditional linear barcode, made of vertical bars. It handles letters and numbers, is compact for its capacity and is read by nearly every scanner on the market, including cheap USB models. If you are not sure what to choose, choose Code 128.

QR codes

A square pattern that holds more data and can be read at an angle. Phone cameras read QR codes without special hardware, which is useful for a small team, a visiting driver or a retailer checking a box. They tolerate a little scuffing, because they include error correction.

You do not have to choose one. Printing both on the same label is common practice: a handheld scans the barcode, and anyone with a phone can scan the QR code. Whichever you use, keep the code itself short and simple. A longer code is more fragile and harder to scan.

What goes on the label

• The unique code, large and clear.
• The product name, size and colour in plain words, so a person can check at a glance.
• The order or customer reference.
• For multi piece products, which part this is, such as “2 of 3”.

Do not print everything on the label. Only put what a person on the floor needs. The rest belongs behind the code, in your records.

1. List every product you make and the attributes that distinguish versions of it.
2. Write your SKU scheme on a single page and apply it to your whole range.
3. Decide for each product whether SKU level is enough, or unit level is needed.
4. For unit level products, decide how many labels each product needs. A bed that ships in three boxes needs three.
5. Pick Code 128, QR or both, and test a print on the real label stock.
6. Agree what a scan means at each station.

If you decide that piece by piece tracking is right for you, Skuflo works from your SKU list. You set how many pieces each SKU ships as, and it prints a Code 128 barcode and QR code on one label for every piece. Our guide on tracking products that ship in several boxes goes into the detail.

• Using the product name as the SKU. Names change, SKUs should not.
• Different departments using different codes for the same item.
• Letting codes drift, so “GREY”, “GRY” and “GRAY” all exist.
• Reusing an old SKU for something new.
• Putting a variable, such as a price, into the code.
• Printing a barcode that nobody has tested on a scanner.

A SKU list is a shared language. Treat it with the same care you would give a price list, because errors in it flow into every order, label and delivery.