As you grow your business and add products and services, it becomes difficult to keep track of them. If you've reached that point, your research has likely led you to wonder what the difference is between SKU and UPC. Further examination shows that they're very different from one another. Whether you need SKUs, UPCs or both depends on what you're using them for and where you sell your products and services.

Tip

SKUs and UPCs serve different purposes. SKUs are used internally to keep track of your inventory, while UPCs are used all over the United States, Canada and other countries to identify every product, no matter where it is.

SKU vs. UPC

SKU stands for Stock Keeping Unit. Its purpose is to enable you to know the status of your stock on hand, such as how many of a product you have and where each is located in your warehouse.

UPC is the acronym for Universal Product Code. The word "universal" signifies that the product code for an item is the same no matter where you are, in any store or warehouse, and no other product has the same code. UPC is increasingly being used in other parts of the world, too, but other codes are still used as well.

Using SKUs to Track Inventory

SKUs help you keep track of your inventory so you can find the correct product quickly and easily and make sure you don't run out of a popular item. Some of the features and benefits of SKUs are:

  • You create SKUs the way that makes sense to your business.

  • The code is alphanumeric; it uses both letters and numbers.

  • The length can vary; using 8 to 12 characters is best for telling products apart. (Don't use characters that are easily confused, like zero and the letter "O.")

  • Keying in an SKU can tell you how many of the product you have in stock and where they're located.

  • Your POS system can include alerts so that when inventory of an item reaches a certain level it's automatically reordered.

  • SKUs go on your product tags and shelves and are often marked with "SKU:" followed by the code.

  • SKU generators can create SKUs for you. (These are sometimes called SKU number generators, but that's an incorrect term; SKU isn't a number, it's a code made of numbers and letters.)

  • SKUs can be used to identify intangible products, too, like a service such as product assembly, which is helpful for invoicing.

It's ideal to create meaningful SKU codes that can be understood by people as well as machines. For example, women's black pants with a zipper, manufacturer Zekel, size 12 could have SKU: zk-pt-zp-bk-W-12, while the same pants for men, size large, color blue would then be SKU: zk-pt-zp-bl-M-L.

You can code your SKUs any way you wish because they're only for your company's use. Maybe it makes more sense, based on how you store your inventory, for your business to start with the item description. But, once you come up with your code, stick with it so that all employees can understand what the SKUs mean. Create a document that identifies the abbreviations you use for manufacturers, items, sizes, colors, etc.

Identifying Products Anywhere by UPC

UPC is an external code given to a product by the nonprofit organization GS1 US. Every single product has a unique UPC. So, if you sell the same video game that a competitor sells, they'll have the same UPC that was given to the product by GS1 US, regardless of the store selling it. If you have 12 copies of the game in stock, all 12 will have the same UPC.

The UPC system debuted in 1974 and was developed to speed up the checkout process. Before that, cashiers manually rang up prices that were stamped on each item. UPC has since expanded to all industries in the United States, Canada and many other countries.

Features and benefits that distinguish UPCs include:

  • They're numerical only; they don't contain letters.
  • Every UPC has 12 characters.
  • The code of the UPC is only understood by computerized equipment, not by people.
  • You don't create UPCs; they're assigned to your products by GS1 US.

Both SKUs and UPCs offer the advantages of speed, accuracy, easier lookups and product tracking. SKUs are for your use only, while UPCs are used around the world. If you manufacture products and need UPCs for them, contact GS1 US to get started.