What is a 'stock keeping unit' (SKU)?

A stock keeping unit, or SKU, serves as a unique identifier for each distinct product and service available for purchase. This designation helps businesses effectively manage inventory by allowing them to track quantities, sales, and product performance individually. Each SKU is associated with specific attributes such as size, color, and type, which further aid in distinguishing products within wider product lines.

This unique identification is crucial for various operational activities, such as stock replenishment, sales analysis, and fulfilling customer orders accurately. By utilizing SKUs, companies can streamline their inventory management processes and ensure they maintain optimal stock levels to meet consumer demand while minimizing excess inventory.

Other options do not encompass the definition of a SKU; for instance, while classifications for warehouse storage and methods for tracking product quality are essential for operations, they do not specifically relate to the unique identification of products. Similarly, although measures of inventory turnover are important key performance indicators, they do not define what a SKU is.