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Stock-keeping unit

A stock-keeping unit, aka SKU, is used to keep track of items being sold.

Expanded Definition

A unit in this case is not an individual product. SKUs identify identical items from the same provider, such as yellow, size XL sweater vests. SKU numbers are used to track inventory.

If you know how database computer programs work, you will recognize that an SKU is a record number. All of the information in a database is stored in records, which usually are assigned numbers sequentially. Lists of information from the data base (usually called reports) are prepared by sorting through all the records for appropriate information and then collecting that information into a list. The database program can also do calculations on the information.

Hence, a report can be prepared listing all sweater vests offered, or listing all sizes and colors separately with subtotals. Inventory, sales for the month, sales to a given customer, etc. The report can be customized to collect whatever information is of interest.

This kind of software is usually known as enterprise software. Information entered when an order is placed can determine what is in inventory where, recommend which inventory to ship, and when to reorder or manufacture. It also records when the order ships, deducts the product frum inventory, and sends the customer a bill. Walmart is famous for integrating point of sale information from the scanners at checkout, so they know immediately what is selling where now. Supplier also get the information so they can refill the pipeline quickly, making more product while it is hot, or shifting inventory to where it is selling.

Many enterprise programs can also figure the saleman's commission, and calculate deductions and write paychecks. Most can also make payments for raw materials and other bills etc. Humans get involved at various stages to make key decisions and approve computer recommendations, to input information, and to double check. This is current generation back office automation which is continuing to make inroads on several fronts in business.

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