What’s the Difference Between SKU and UPC Numbers?

Managing inventory is essential to running a successful business. It helps you track your products, maintain accurate inventory levels, and stay organized. Two tools that simplify inventory management are SKUs and UPCs. 

These systems assist business owners in identifying, organizing, and tracking their products. While they serve similar purposes, SKUs and UPCs have distinct features that businesses should understand.

We will explain the workings of SKUs and UPCs and show how to use them to improve inventory management.

What is a SKU?

A Stock Keeping Unit (SKU) is a unique alphanumeric code businesses use to track their products. A company will develop and customize an SKU system to address the organization’s unique requirements. SKUs are critical for managing inventories and ensuring operational efficiency.

Characteristics of SKUs

• SKUs contain letters and numbers, giving businesses flexibility in how they structure the codes.
• They are typically 8–12 characters long but can vary based on business preferences.
• SKUs encode product details like color, size, style, or other key identifiers.

Example of a SKU

Imagine a clothing store selling t-shirts. The store assigns an SKU to each type of shirt. For a medium red t-shirt, the SKU could be TSH-MED-RED. This code acts as a unique identifier, helping employees and systems quickly identify the item.

Benefits of SKUs

• Organized inventory: SKUs make it easy to group products by attributes like color and size, streamlining inventory tracking.
• Tracking performance: Businesses can use SKU codes to see which items sell best and adjust their stock accordingly.
• Flexible system: SKUs can be updated as your business grows or your product offerings change.

SKUs are particularly useful for businesses with a wide variety of products. They simplify internal tracking and improve the accuracy of inventory management processes.

What is a UPC?

A Universal Product Code (UPC) is a 12-digit number used to identify products. It is assigned by GS1, a worldwide organization that sets rules for product identification. Unlike SKUs, companies purchase and license UPCs for universal use, which ensures consistency across the retail supply chain. Each UPC barcode is paired with a scannable label visually representing the identification number.

Characteristics of UPCs

• UPCs are always 12 digits long, making them a standard format.
• They are paired with barcode labels, enabling quick identification at the point of sale.
• Once assigned, a UPC cannot be changed or reused.

Example of a UPC

A bottle of shampoo might have a UPC like 012345678901. This code is the same no matter where the shampoo is sold, making it easy to track in stores or online. The product’s UPC barcode ensures consistency in identification.

Benefits of UPCs

• Global recognition: UPCs are standard worldwide, making them essential for businesses participating in the global trade item numbers system.
• Improved accuracy: UPCs minimize errors in pricing and inventory levels by ensuring every product is uniquely identifiable.
• Retail compatibility: Many big retailers and online platforms, like Amazon, need UPCs to list products. This makes UPCs very important for business owners who want to grow.

UPCs are ideal for businesses that want to expand into new markets or sell their products through third-party retailers.

Key Differences Between SKUs and UPCs

SKUs and UPCs both identify products, but they differ in their creation and use. Here’s a comparison:

SKUs are best for internal use, while UPCs work well for external operations. Together, they provide a complete inventory management system.

How SKUs and UPCs Work Together

Using both SKUs and UPCs can improve inventory management. They complement each other by serving different needs:

• Internal and external tracking: SKUs help businesses organize products internally, while UPCs make tracking products across supply chains easier.
• Accurate data: UPCs ensure consistent identification, and SKUs provide detailed insights into variations, like color or size.
• Streamlined processes: Together, they reduce errors and make inventory systems more efficient.

For example, a retail store might use UPCs to identify products globally and SKUs to track specific variations within their inventory system.

Benefits of SKUs for Small Businesses

Small businesses can use SKUs to manage their inventory without needing to buy expensive systems. Here’s how SKUs help:

• Better organization: SKUs group similar items, making it easier to find and manage products.
• Sales insights: Tracking which SKUs sell best helps businesses restock efficiently.
• Scalability: SKUs can be adjusted as your product range grows.

For instance, a small bakery might use SKUs to differentiate between cakes, cookies, and bread, ensuring nothing gets overlooked.

Benefits of UPCs for Large-Scale Operations

UPCs are essential for larger businesses, especially those selling in global markets. They:

• Simplify international sales: UPCs meet global standards, ensuring products are recognized everywhere.
• Enable retail partnerships: Many big retailers require UPCs to sell products.
• Improve supply chain efficiency: UPCs make it easier to track products as they move between suppliers, warehouses, and stores.

A multinational company might use UPCs to ensure all products are consistently identified across regions, using unique identifiers to avoid errors.

Best Practices for Implementing SKUs and UPCs

For SKUs:

1. Use a logical system: Create SKUs that include key product details like type, color, and size.
2. Avoid confusing characters: Don’t use similar-looking characters like O and 0 or I and 1.
3. Keep them consistent: Regularly review and update your SKUs to ensure accuracy.
4. Train your team: Ensure all employees understand how to use SKU codes effectively.

For UPCs:

1. Buy from GS1: Purchase official UPCs to avoid counterfeit codes.
2. Plan ahead: Estimate how many UPCs you’ll need as your product range expands.
3. Integrate with software: Use inventory systems to link UPCs with your product data.
4. Display barcodes clearly: Ensure barcodes are easy to scan on all packaging.

Emerging Trends in Inventory Management

Businesses are adopting innovative tools that go beyond SKUs and UPCs, including:

• RFID technology: Providing real-time tracking for more efficient inventory control.
• Artificial Intelligence (AI): AI predicts demand and improves stock optimization.
• Blockchain: This technology secures product data and boosts supply chain transparency.
• Cloud-based systems: Cloud platforms enable real-time inventory updates and remote access.

Take your inventory management to the next level by creating a clear SKU system and securing official UPCs today.

SKUs and UPCs are essential tools for inventory management. SKUs help businesses organize and track products internally, while UPCs provide a standardized system for global identification. Together, they streamline inventory management, improve accuracy, and enhance customer satisfaction.

Take the Next Step with AccuGraphiX

Businesses of all sizes should consistently seek ways to enhance efficiency and boost productivity. At AccuGraphiX, we can assist you with your GS-1 labels for your products. Don’t waste time trying to mass-produce your labels—let us handle it for you. Contact us with any questions.

Phone: (714) 632-9000

Email: [email protected]