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How to Create Efficient SKUs and Barcodes for Your Small Business?

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SKUs, UPCs, barcodes—Are you aware of how all this new technology can help you run your small business smoothly? Being an entrepreneur can be exciting but really hard as well. You can’t be an expert in every area and we acknowledge that. We’re also pleased, however, to give you the basics to clarify the words and shed some light on exactly what these advanced tools of the trade can do for you and your small business.

1. Why understanding SKUs can promptly improve your inventory management?

Don’t be confused anymore and make sure you know the basics of product codes and the best practices.

What is the meaning of SKUs?

SKU meaningSKU, pronounced as “skew”, is a special number that can transform how you organize your business products.

What is a SKU number?

SKU stands for Stock Keeping Unit. It is an internal product inventory coding that identifies all your product features (colour, size, etc.). These codes are unique to your company and allow you to keep track of your inventory easily. 

How are SKUs set up?

Whether you create your code manually or use a SKU generator, your first task will be to list all the variants that define your product or any classification that is relevant to your business: type, brand, style, colour, size, gender, cost, material, season, stock location or supplier, origin, purchase date, expiration date, etc.

Download our SKU Generator for free to create SKU for your products. 

 

Let’s say you sell shoes. Here is an example of a list of different variants that you could consider before generating SKUs:

  • Style: sport shoes
  • Type: running shoes
  • Colour: pink grey
  • Season: spring/summer
  • Gender: woman
  • Size: 6
  • Stock Location: Warehouse 1

Variants of shoes

Creating SKUs is easy and companies of any size can afford to set them up. A few rules, however, should be followed. View the section: How to set up your SKUs: dos and don’ts. Small businesses could easily simplify their inventory management and greatly benefit from SKUs. We have listed all the advantages in the following part: 12 reasons why your small business can benefit from SKUs.

What is a UPC code?

The UPC (Universal Product Code) seems similar to SKU, but actually the two are different in many ways. The UPC is commonly called a barcode that was introduced in 1974 to help retailers track trade items. UPCs are numeric codes with 12 digits. If you are looking to sell your own products in retail stores or on Amazon, you would need to associate your product with a worldwide compatible database and buy UPCs.

How do I get UPC codes?

UPCs are administered and sold by GS1 US, the American branch of an international organization GS1 (formerly Uniform Code Council). A UPC code is assigned to a unique product and remains constant throughout the product’s shelf life. The UPC code always stays the same among all retail outlets. You only need a UPC code for product sold through retail supply chains.

 

If you have an international business you should know that, for some countries, you need to use a special 13-digit version of a UPC called an International Article Number (IAN) or European Article Number (EAN).

SKU numbers are often confused with the terms barcode or UPC.
 

SKU vs UPC comparisons

SKU vs UPC

 

 

What are EAN, ISBN and ASIN?

Do these ring a bell? No, they are not one of the hottest new rap groups, but they can sure be useful to your business! Let’s quickly identify them to end your training on product codes basics and begin with your becoming an accomplished entrepreneur in labelling products!

  • EAN/IAN: When selling products internationally, you may need to use a special 13-digit version of a UPC called an International Article Number (IAN) or European Article Number (EAN). If you need either of these for your products, you should visit the GS1 website to know how to buy some. 
  • ISBN (International Standard Book Number): It is a unique barcode identifying books only.
  • ASIN (Amazon Standard Identification Number): It is a 10-letter digit to identify products sold on Amazon. For books only, the ASIN is the same as an ISBN.

 

 

Barcodes stickers

 

2. How creating SKUs can help entrepreneurs make their business profitable

In today’s challenging business practices, small companies can’t compete without using professional tools. From now on, stop tedious and time-consuming inventory practices and start setting SKUs as the backbone of your inventory management.

Download our SKU Generator for free to create SKU for your products. 

 

12 reasons why your small business can benefit from SKUs

Why creating SKUs

DRIVE EFFICIENCY AND INCREASE PRODUCTIVITY

1. Dramatically improve operations from sales to inventory management by making products easy to sort, find, search and reference from estimates, sales orders, shipping orders and invoices.

2. Always keep track of every item in real time.

 

OPTIMIZE INVENTORY MANAGEMENT

3. Shorten the account for every product in your inventory.

4. Avoid stock-outs by real-time identification of low stock or shrinkage.

5. Have better control of your supply chain, with an alert that signals when replenishment is necessary and allows you to set up reorder points.

6. Simplify inventory reconciliation.

7. Facilitate stock adjustment, by creating stock entry, stock removal, or stock movement between locations or update inventory.

8. Multi-location inventory allows you to sort your items in different locations, so they never get lost.

 

IMPROVE QUALITY CONTROL AND CUSTOMER SATISFACTION

9. Decrease the number of problems that occurs from human error, such as miswriting or mispicks.

10. Improve client satisfaction by giving a better transparency to product availability and by promptly sending orders.

 

GAIN PROFITABILITY

11. Better profit analysis is increased when you can define precisely what item/variant is the most profitable and build reports, in order to better plan your investments.

12. Protect your margin, so that consumers cannot easily compare products from one store to another and retailers don't have to match the price.

 

 

 

Do's and Don'ts

How to set up your SKUs: dos and don’ts

 

Do's

  • Use it internally only: Companies use SKUs mostly for internal purposes to track inventory, although customers can find information about many products by using the SKU number (invoices, catalogs, etc.).
  • Choose a format and stick to it.
  • Make it easy to understand: the letters and digits should have a meaning for the people within your business (i.e. S, M, L, XL).
  • Keep codes short: between eight and 12 characters.
  • Start with letter(s). It’s easier to read and identify.
  • Use a combination of numbers or letters.

 

Dont's

  • Do not start with a zero or symbols that can be misread by humans or software.
  • Never use the same SKU for different products.
  • Avoid using a manufacturer’s SKU. They are often too long and if you change suppliers, it becomes meaningless to your business.

 

 

SKU generator: the smart way to create SKUs

SKU generator illustration

 

You can choose to set your SKUs, by using a manual system or a generator. It really depends on the number of items, product lines, and variants you are dealing with.

If you’re currently using manual spreadsheets, ensure you’ve listed all your products, including variants/options, so that you can then design your very own automated format of SKUs, one after the other.
 
Or, you can go for a more technological tool: a SKU generator! Perhaps you’re imagining an old, infernal machine where you put all the information on one side and after 15 minutes of clunks and whistles, your codes are all sorted and ready to use!
 
It’s actually far more advanced than that. An online generator will simplify the process of creating SKUs tremendously, but only if you have a clear idea of your priorities, including the list of variants needed within your system: type, brand, style, colour, size, gender, cost, material, season, and more.
 
 

Free SKU Generator:

 

 

3. Why small business should use barcode

Barcode Illustration

Every business that handles inventory requires an effective inventory management system, and barcodes have long been the foundation of the most effective, comprehensive, and reliable methods for managing inventory on a small or massive scale. Barcodes reduce the likelihood of human error and help companies gain complete visibility into their stock levels and other valuable data that can inform decision-making.

  • It's helpful to have barcodes when you run a business because you can keep more accurate track of your inventory at a much quicker pace than counting items by hand.
  • Small businesses can use barcode technology to improve accuracy, speed and efficiency without significant expense.

 

Barcodes basics

What is a barcode?

Barcodes are the black-and-white series of scannable images used in retail settings to identify a unique product within seconds. The bars, shapes and spaces on a barcode correspond to numbers and letters that represent descriptive data.

TIP: UPC codes are always accompanied by barcodes and, in the common language, barcode often means UPC code. To know more about UPC codes, see our article: What is a UPC code?

 

You will need a reliable scanner to scan the barcodes, in order to find the matching item and information such as the brand, model, size, price, etc. The scanner allows you to transfer automatically information about the product to your computer system.

Types of barcodes: When choosing the right types of barcodes for your products, inventory or assets, you face two main options:

 

1D vs 2D barcodes

 

QR codes or 2D barcodes are capable of holding 10 times the amount of information, when compared to 1D barcodes. They are also small and easy to scan. Most smart phone owners recognize a QR code and know how to scan one, so it’s easy to use these codes to get information about products, job openings, or other situational information out to a wide audience. A QR code can also be dedicated to other uses, from promotions and establishing client relationships to accessing videos about your products.

1D Barcodes vs QR codes

1D barcodes represent the traditional version of codes, whereas 2D barcodes (QR codes) represent the new, rising technology. Note, however, that QR codes are not yet common in operations for small businesses, since specialized scanners and software are required.

 

Top 7 tips for creating efficient barcodes

As new barcode users, here are the basic steps you must take to begin using barcodes from UPCs:

  • Assign the numbers that go inside the barcode, called GS1 Identification Keys that you can obtain from a GS1 Company Prefix (see section about: How do I get UPC codes).

 

  • Assign identification numbers to your trade items (products or services), locations, and more.

 

  • Select a barcode printing process, whether traditional, digital, or a combination of both, depending on the information inside, such as static (always the same) or dynamic (all or part changing).

 

  • Define where the barcodes will be scanned: At the retail point-of-sale, you will need to support multi-directional scanning and, if it is scanned in the warehouse as well, you will need to print in a larger size.

 

  • Select a barcode: EAN/UPC symbols, 2D symbol, etc.

 

  • Pick a barcode size, text and colour when designing your barcode: The size depends on the symbol specified, the place where it will be used, and how it will be printed. The text beneath a barcode, called Human Readable Interpretation (HRI), is important because if the barcode is damaged, then the text can be used as a backup.

    The optimum colour combination is black bars with a white background, but another colour combination can be used.

 

  • Pick the barcode placement: Think about the best symbol placement on your product.

 

Make a barcode for your product

 

How to generate barcodes from SKUs

Many people think you need to have a registered UPC code in order to scan items, but thankfully that’s not true! Depending on your format, any alphanumeric SKU can be used as a barcode (What is a SKU number?).

You can accomplish this by simply changing the font you are using to a barcode font.
Alternatively, you can use online websites, barcode generators that will generate barcodes for you simply by entering your data. By using tools such as these, you can easily translate a string of text, numbers, or a combination of both into a graphical picture that can be read by a barcode scanner. Print this and stick it above or below your product on the shelf.

 

Barcode generators

Multiple free barcode generators exist on the market. You need to look for a reliable one that will be able to handle all your specifications listed above.

Here is a free barcode generator: https://barcode.tec-it.com/en/Code128

 

Barcodes Printer

How to print barcodes

If you design your own packaging, then all you need to do is take the barcode and integrate it into the artwork of the package (traditional or digital printing). You can also label your products manually by using standard labels that you can buy from an office supply store or make yourself with a specialized label printer. 

 

What are the types of barcode scanner technologies?

There are four major types of barcode scanners, including pen, laser, CCD (charged-coupled device) and 2D camera-based scanners (smartphones, for example, are 2D-based).

Here is a quick review of their specifications and pros & cons:

Types of Barcode Scanner

Most small businesses will choose to use a laser based barcode scanner since it currently offers the best compromise between price and functionality.

What software do I use?

Remember that a barcode scanner simply grabs the data off a barcode image and inputs what it reads into a computer. You will need to link it with the product details by using a software system that ties all the components together. You have a whole range of options, but we recommend a good and reliable inventory system, such as erplain, to easily optimize your organization.

 

Questions Illustration

 

8 essential questions to ask yourself before choosing a barcode technology

Keep in mind that a barcode scanning system should be efficient, productive, and easy to use.

  1. In what type of environment will the bar code scanner be used? For an industry environment, such as a production site, you will require a barcode scanner that is very resistant, sometimes water- and dirt-resistant.
  2. What are your goals? Before selecting a barcode system, logistics managers should ask what their purpose for it will be: Is it to increase processing speeds? Track inventory? Record activity? Secure your products?
  3. What type of usage will you have? The area your scanner will be used in is important. A crowded or high-volume area, for example, or other problems that might potentially harm a scanner, will require your attention. If you are using the scanner a lot, then look for models with high reliability; don’t purchase solely on price. Most of these systems offer specs on their durability and cycle.
  4. Is your scanner capable of recognizing multiple barcode types? This is necessary, so you won’t have to worry about your scanners when changing barcode formats (1D or 2D)
  5. Does it integrate into your Inventory software or ERP? Simply adding barcode scanning is not the end-all solution. If the customer's process or business solution is flawed, scanning will add information to a flawed solution in a more efficient manner. The ability to integrate in real time with the back-office ERP system is key to efficiency.
  6. Does it integrate with your accounting software? Beware! Some barcoding systems work with some—but not all—accounting systems.
  7. What about labels? Many companies simply forget about the label because they are so focused on systems and devices. Then, when it becomes time to ship product, they realize they can’t, because there is no label.
  8. How much will it cost? The proliferation of barcodes and availability of inexpensive equipment have made barcodes affordable for almost any organization. Even small businesses can download barcode fonts from the Internet, often for free, and begin labelling packages and inventory.

 

Barcodes illustration