SKU vs UPC: What Are They?
Intro
If you’ve ever created or sold a physical product, you’re probably already somewhat familiar with these two common acronyms: SKU and UPC.
Although they share similarities, these words aren’t exactly the same. And, for brands looking to simplify their inventory management and streamline operations, it’s important to really understand what both terms mean & how to use each of them.
Below, we’ve outlined the definitions & uses of “SKU” and “UPC”, as well as a couple tips to help get you started. (If you’re a current brand and want help with importing items to Ramp, please check out our docs page.)
SKU - Stock Keeping Unit
SKU (/'skyo͞o/), pronounced "skew", is an acronym for Stock Keeping Unit.
SKUs typically consist of a combination of meaningful letters and numbers, and usually range in length from two to twenty characters. By assigning a SKU to each unique item, businesses can easily track inventory and ensure that they have the correct items in stock.
As a unique identifier, brands assign a SKU to each product they wish to track — down to the product’s most unique feature. For example, in apparel, a SKU is commonly a combination of a product’s “style” + “color” + “size”.
SKUs are different from UPCs (universal product codes). While UPCs are 12-digit numerical codes assigned to products (often by manufacturers), SKUs help humans visibility differentiate between physical products.
Who cares about unique item names? Your entire supply chain! Streamlining your item creation process increases your speed-to-market and strengthens your supply chain.
Quickly and intelligently assigning easy-to-understand SKUs helps:
Your sales force to efficiently convey information about your products to buyers (sell more)
Your customers to understand the important product attributes (reduce returns)
Your factories to improve quality control and (decrease production problems that occur due to miscommunication)
Your warehouse to turn product faster (increase fulfillment speed)
UPC - Universal Product Code
UPC stands for Universal Product Code and are a type of barcode made up of a pattern of black bars and white spaces.
Printed on almost every product that we buy in stores & online, UPCs are used to track + identify products using a variety of handheld or mounted scanning machines.
Many decades ago, keeping track of product inventory was a painstakingly complex task. Companies needed a more efficient way to keep track of what product they had on hand, which quantities were coming & going, and more. That all changed when a curious engineer began working on a solution that would change tracking physical products forever.
While working for IBM in the mid 1970’s, George Joseph Laurer introduced the first version of a universal system that could quickly identify different products by any company, regardless of size or industry. With the help of the National Association of Food Chains, this new system revolutionized product handling efficiencies to improve product tracking and inventory management.
In today’s environment, UPCs are critical for modern companies because UPCs allow people & systems to quickly and easily track physical products. And by scanning a product’s barcode during processes such as receiving, shipping, or storing inventory, companies can get faster access to inventory insights. Brands with faster access to realtime inventory can make quicker informed decisions, as well as present newer product to end-customers sooner.
Key differences of SKUs & UPCs
SKUs are assigned internally for internal tracking purposes vs UPCs are assigned externally by a nonprofit (like GS1) for external tracking by retailers and distributors at the point-of-sale.
Sellers can use any naming convention they want when creating SKUs (non-standardized), while the practice of creating UPCs is strictly standardized.
Various retailers might use a different SKU code for the same product vs UPC codes, which will have the same code regardless of the seller.
SKU codes can be alpha-numeric vs UPCs, which are only numeric.
SKU codes may be interpreted by humans, while UPC codes cannot.
Conclusion
When it’s time to move to a 3PL, make sure your future-partner supports inventory tracking . At Ramp, we help our brands maintain confidence in their inventory levels, receiving & shipping accuracy, and more with the help of item SKUs and UPCs. If you’re interested in shipping with Ramp, get started here.
Ready to get started? Get connected with one of Ramp’s logistics experts today.