Barcodes might seem mundane, but they are the backbone of the modern ecommerce industry. They help businesses track inventory, manage orders, and provide a seamless shopping experience for customers. But with so many types of barcodes, choosing the right one for your business can be challenging.
In this blog post, we will explore two of the most popular types of barcodes in ecommerce: Universal Product Codes (UPC) and Stock Keeping Units (SKUs). You might have heard of these terms before, but do you know the difference between them? And which barcode is right for your business?
We will demystify UPC and SKU benefits and drawbacks. You’ll also learn about barcodes, how they work, and how they can help you grow your ecommerce business.
So whether you’re a seasoned ecommerce veteran or just starting, join us as we dive into the world of UPC and SKU codes and help you choose the correct barcode for your business.
Unraveling the Basics
Did you know that UPCs were first introduced in 1974 and that the first product ever scanned was a pack of Wrigley’s Juicy Fruit gum? And did you know that retailers often use SKUs to track inventory at a more granular level than UPCs?
Universal Product Code (UPC): Explained
The Universal Product Code (UPC) is a 12-digit barcode unique to every retail product. Unlike SKU, a UPC barcode is specific to the product manufacturer, making them a standardized identifier for tracking items across various retailers.
Definition and Use
UPC codes are symbology barcodes used on the packaging for tracking an item. UPC facilitates faster checkout processes in stores. Manufacturers and distributors use them to manage their supply chains and access critical product information. Retailers, in turn, benefit from greater inventory control.
GTINs and UPC: Are They the Same Thing?
UPCs are a type of Global Trade Item Number (GTIN), a universal product identification system. GTINs can be different lengths, such as the GTIN-12, GTIN-13, and GTIN-14. Although UPCs and GTINs serve similar purposes and GTIN is a number, they differ in structure and assigned regions.
Stock-Keeping Unit (SKU): Explained
What is Meant By SKU?
A Stock-Keeping Unit (SKU) is a unique identifier number (an eight alphanumeric code) that retailers assign to each product. This code helps you track information about your inventory items, such as variations, sizes, colors, and more.
The Role of SKUs in Inventory Management
SKUs play a crucial role in inventory management by allowing you to monitor stock levels and make reordering easy. Additionally, they provide insights into your best-selling products and help prevent stockouts and overstocking.
Importance of SKUs for Businesses
SKUs are essential for your business as they streamline warehouse operations and simplify sales data analysis. By implementing a well-organized SKU system, you can improve overall efficiency and make informed business decisions.
Differences Between SKUs and UPCs
UPC Numbers vs. SKU Numbers: The Key Distinctions
UPC, or Universal Product Code, is a standardized 12-digit barcode used worldwide to identify products uniquely. These codes enable retailers to track and manage items in their stores efficiently.
SKU, or Stock Keeping Units, is a unique alphanumeric code each retailer assigns to differentiate their products and simplify internal inventory management.
The primary difference lies in their purpose when comparing SKU and UPC numbers. UPC numbers are universal and intended for external use, allowing retailers and consumers to identify products quickly. On the contrary, SKU numbers are internally focused and unique to your business, helping you manage and track inventory.
While an SKU is customized to your specific business needs, they don’t hold any inherent information about the product. UPC, however, contains a standardized format that can provide vital information such as the product’s size, brand name, and color.
Alphanumeric vs. Numeric Codes: Understanding the Code Types
SKU numbers can be alphanumeric or numeric, giving you greater flexibility in code creation. This ability allows businesses to craft codes that suit their inventory organization requirements better.
In contrast, UPCs are strictly numeric, ensuring consistency and efficiency in the scanning process at retail points of sale.
Internal vs. External Use
UPC numbers are intended for external use, and their primary function is to serve in the marketplace for retailer scanning and data collection. UPCs use a globally recognized numbering system to create a consistent identifier for products sold across multiple platforms.
However, SKU numbers benefit internal operations, like tracking inventory levels and aiding in efficient warehouse organization. They’re unique to your business and customizable (depending on the needs of your business), making them an essential tool for managing your product catalog.
The Role of Product Fulfillment Centers In SKUs and UPCs
Efficient product fulfillment centers have a significant role in maintaining a smooth supply chain and using SKUs and UPCs effectively is paramount to their success. Let’s dive into how these two systems are crucial in warehouse management and inventory tracking.
Managing UPC and SKU Codes in Product Fulfillment Centers: An Overview
Product fulfillment centers are critical in managing UPC and SKU codes by ensuring that products are accurately identified and tracked throughout the fulfillment process.
When a product is received at a fulfillment center, it is assigned a unique SKU number for internal tracking. This SKU number tracks the product throughout the fulfillment process, from receiving to storage to shipping.
During the fulfillment process, the SKU and UPC codes track the product’s movement through the warehouse, including picking, packing, and shipping. When the product is picked from inventory, the fulfillment center will scan the SKUs and UPCs to ensure the correct product is shipped.
Once the product is shipped, the UPC tracks the product during shipping and delivery. This enables the recipient to verify that they have received the correct product and helps prevent errors or confusion during delivery.
How Do SKUs and UPCs Streamline Warehouse Management?
By utilizing SKUs and UPCs, you improve warehouse efficiency, reduce the risk of errors, and provide a seamless process for picking, packing, and shipping products. Accurate inventory tracking will save you time and resources when dealing with returns or exchanges.
For instance, warehouse staff can rapidly scan the UPCs to ensure the products are correctly identified and added to the stores’ inventory system when receiving new inventory. Additionally, warehouse managers can better prepare for seasonal variations in demand, adjust inventory levels depending on sales data, and prevent overstocking or stockouts by using SKUs to track inventory.
SKUs and UPCs in Action: Real-Life Business Examples
In inventory management, SKUs and UPCs are vital in tracking and identifying products. In this section, we’ll explore some real-life business examples to see how companies utilize SKU and UPC numbers and the methods and tools for tracking them.
Showcasing Companies That Utilize Both SKU and UPC Numbers
Large retailers like Walmart and Amazon rely on SKUs and UPCs to manage their extensive product catalogs. The retailers assign SKUs to ensure the uniqueness of each item within their inventory. On the other hand, UPCs are assigned by the manufacturer or brand owner and are used throughout the supply chain to identify and track products.
Other large corporations across various industries, such as Target, Coca-Cola, and The Home Depot, frequently employ SKU and UPCs to manage inventory and sales data. Businesses can accurately track and monitor their products by utilizing both, allowing them to make educated decisions about inventory levels and purchasing.
Tracking SKUs and UPCs: Methods and Tools
Several tools are available to help you track and manage SKUs and UPCs. These tools fall into a few main categories:
- Barcode Scanners: Handheld or fixed barcode scanners read SKU and UPC barcodes to track inventory movement and monitor stock levels.
- Inventory Management Software:Softwares like QuickBooks or Fishbowl provide end-to-end inventory management solutions by integrating SKU and UPC tracking with order processing, shipping, and reporting features.
- Enterprise Resource Planning (ERP): ERP software can manage SKUs and UPCs, ensuring streamlined inventory control throughout your organization. ERP systems offer a centralized platform integrating various business processes, including procurement, sales, and finance.
In conclusion, SKUs and UPCs are essential in inventory management, with companies of all sizes leveraging their unique capabilities for tracking and identifying products. Utilizing a combination of barcodes and specialized tools can significantly improve efficiency and accuracy in managing your inventory.
Choosing the Right Code for Your Business
Do You Need Both SKUs and UPCs or Can You Choose One?
First, evaluate your business requirements. If you’re a retailer selling various products from different manufacturers, UPCs are essential for tracking and inventory management. However, if your business manufactures and sells its items, SKUs can be a more suitable choice for in-house organization and management.
Consider using SKUs and UPCs interchangeably if you require more control over inventory and want to streamline collaboration with third-party retailers. Both codes can work together, complementing each other to manage your business operations efficiently.
When to Use UPCs: Ideal Scenarios
UPCs are best suited for businesses that need to communicate product information with external partners, like retailers and warehouses. They come in handy when your products are sold across multiple retail stores and online platforms. UPCs are standardized, making them essential for tracking products globally.
Best Practices for Creating SKU and UPC Barcodes
- SKUs: Keep them unique, descriptive, and consistent. Use alphanumeric codes with a fixed length, and avoid using special characters, spaces, and letters that are easily confused (e.g., %,*,@).
- UPCs: Obtain them from Global Standard 1 (GS1)–a global system of standards. You’ll be assigned a company prefix and responsible for assigning unique numbers to your products. Be sure to follow all GS1 standards for your barcodes and their sizing.
Remember that using the appropriate code system will enhance your inventory management, communication with trading partners, and overall business efficiency. Constantly assess your business requirements and the nature of the industry when deciding between SKU and UPC systems.
The Barcode Connection: SKUs, UPCs, and Barcodes
SKU vs. UPC vs. Barcodes: Dissecting the Differences
To better understand product codes, it’s essential to start by dissecting the differences between SKUs, UPCs, and barcodes.
While each of these components serves the purpose of product identification, Stock Keeping Units (SKUs) are internally used by companies or retailers for inventory tracking. In contrast, Universal Product Codes (UPCs) are globally recognized standardized item identifiers.
On the other hand, Barcodes provide a visual representation of the SKU or UPC, which can be easily scanned with a barcode reader for quick processing during sales or inventory management.
In your journey to understand the differences between UPCs and SKUs, you’ve learned that UPCs are globally unique identifiers assigned by GS1. In contrast, SKUs are internal identification codes created by individual retailers or businesses. Knowing the distinctions between these two codes is crucial for effectively managing your inventory and optimizing your products’ visibility in online marketplaces.
Regarding product organization, remember that UPCs are essential for scanning and tracking items across various sales channels. On the other hand, SKUs allow you to customize your inventory management systems to cater to your specific needs. Consequently, leveraging UPCs and SKUs ensures efficiency and accuracy in your operations.
Frequently Asked Questions
Q. Can I use SKUs if I already use UPC codes?
Yes, you can use both SKUs and UPCs in your business. UPCs help track products globally, while SKUs are specific to your inventory management system.
Q. Which is more vital for my business: SKUs or UPCs?
Both SKUs and UPCs have advantages. If inventory management is a priority, focus on SKUs. For tracking and selling products in the market, UPCs are essential.
Q. How can I create UPC and SKU codes for my products?
To create UPCs, apply for a company prefix through GS1. After obtaining the prefix, assign a unique product number using approved barcode-generation software.
Create a unique and systematic SKU code based on your inventory management system’s requirements.
Q. Are there any legal requirements for using UPCs and SKUs?
UPCs require adherence to GS1 standards and may have legal requirements depending on your geographic location and industry. However, SKUs are internal to your business and typically do not have legal standards.
Q. What are other product identification systems?
Besides UPC and SKU codes, several other product identification systems are used worldwide. The EAN (European Article Number) is a system used primarily in Europe and is similar to UPCs in that it uses a series of digits to identify products. The JAN (Japanese Article Number) is a variation of the EAN used explicitly in Japan.