Every product out in the world can have multiple types of unique identifiers, depending on the type of person that needs to see it. For example, whenever you’re at the store you can clearly see a barcode and corresponding number on most items on the shelf. These are called UPCs, or Universal Product Codes; essentially, they’re a way for a computer to recognize the product and tell you what its price is. There are other types of codes that can be assigned to products, though. For example, a book has a specific code called an ISBN, or International Standard Book Number, that help identify details like edition, recommended price, and more. Amazon has a proprietary coding system for products sold through their platform called ASIN, or the Amazon Standard Identification Number; this is generated when a product is uploaded and helps both sellers and distribution center personnel.

But these codes all tend to be more consumer- and retailer-facing. What do companies use when dealing with their own inventory? Welcome to the world of the SKU, or Stock-Keeping Unit. SKUs are unique identifiers created by companies so that their own warehouse, sales, and customer service teams can identify inventory more easily – and unlike barcodes, which are issued by a standards organization according to certain guidelines, SKUs follow only one set of rules: those made by whoever creates them. It’s because of that same flexibility that SKUs also have the potential to get messy – or downright useless.

Here’s our guide to strategically creating a SKU system that works for you:

Organize Logically

SKUs are pretty much exclusively for use by you and your teams, so make them in a way that makes sense for your particular business needs. Generally speaking, a good rule of thumb is to code your SKUs leading with the most general information (e.g. brand or product line) and ending with the most specific information (e.g. product size). So, for example, if we had a warehouse full of hard drives, and we wanted to give a SKU to the LaCie Rugged Thunderbolt USB-C 5TB External Hard Drive, we might phrase it in the following order: LAC (LaCie) –> RG (Rugged) –> TBC (Thunderbolt/USB-C) –> 5 (5TB). Warehouse staff would be easily able to locate the drive by using the SKU LAC-RG-TBC-5. If you wanted to store the 2TB variant right next to it, no problem! Use the SKU LAC-RGD-TBC-2. If you want to sell some of the older USB-A versions of the drive, you might consider the SKU LAC-RGD-UBA-500GB.

Only use information that can help you immediately locate the item in question and verify that it’s correct. For example, if you have a sneaker warehouse, it’s best to avoid less obvious traits like the material the sole is made out of. If you have TVs, it’s probably best not to include the year the TV was made.

Avoid Symbols If Possible

This #%&* can get confusing. No, really, symbols have no place in SKUology. Stick to alphanumeric characters, with the exception of hyphens; this method is more intuitive and less easily misread. For example, can you imagine the mayhem if the difference between your $200 item and your $5,000 item was that one SKU read 550 | GBS and the other read 550 / GBS? Get ready for a lot of angry customers!

Avoid Binary and Lowercase

Avoid zeros and ones in your SKUs. Why? Simple: they’ll get confused for O’s and I’s. We’ve seen it happen before – and way more often than you might think. Speaking of confusing, ever get a capital “I” confused with a lowercase “l?” It happens all the stick. Stick to capital letters.

Don’t Just Use the UPC

Sure, you can’t get more unique than a UPC, but it will make your warehouse team’s lives so much more difficult! Imagine having to open every box to make sure that the correct item is inside because the SKU isn’t intuitive. And imagine, for just a second, that the manufacturer included the wrong UPC on the item. (This is not as rare as you think.) Well, now you’re screwed for sure!

Short(ish) and Sweet(ish)

Limit the size of your SKUs. Remember that the variable we’re optimizing for is ease of use, not necessarily specificity. If your staff can easily locate a product with half the amount of information while maintaining the same tiny rate of inaccuracies (remember Six Sigma training?), then that’s good news. Don’t overcomplicate things and make people read more than they have to.

Oh, and… Use a Font That’s Legible

We can’t begin to tell you how many times someone thought it would “look good” to print all of this information in a complicated serif font because it was “consistent with the brand.” No! Use bold, sans-serif fonts like Arial, Montserrat, or Helvetica. Shouldn’t have to have a slash through the zero if you’re not using zeroes to begin with (see above). Keep it simple!

That’s It!

It’s not complicated – and if it is, you’re doing it wrong. Make up a system that works for you and yours, and don’t worry about what others are doing. After all, you’re the master of your own business!