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SKU (Stock Keeping Unit)

A SKU is a unique product identifier used to track inventory and sales at the variant level (size, color, configuration, etc.).

Why It Matters

  • •Forms the base unit for inventory management and financial evaluation.
  • •Each SKU competes for the same pool of working capital.
  • •SKU-level profitability varies significantly, even within one product line.
  • •SKU-level metrics are essential for accurate capital allocation.

Connection to Capital

Capital is invested SKU by SKU; therefore, financial decisions must also be made at the SKU level rather than using category or product-line averages.

Related Terms

Replenishment / Restock Inventory Turnover Sell-through Rate

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