Why Manufacturers Need a Strong SKU Strategy to Succeed in Ecommerce



Who would think that a number as simple as an inventory management unit (SKU) could drive your business processes and impact your customer experience? Plus, whether you mention it as a part number, inventory ID, or SKU, you need a way to quickly identify your inventory and locate it in your warehouse, whether you’re consuming it for your production or ship it to a customer.

You can use your SKU numbers on a variety of documents, including your sales orders, purchase orders, and invoices. You can also use them as a search parameter on your websites to speed up searches for specific products or parts. If you have multiple systems like your ecommerce websites, EDI, ERP, or MES feeds, they could all follow their pattern to uniquely identify your inventory. As you grow, you need a unifying SKU strategy as you add more products (or their variations) to your portfolio. The SKU strategy could also influence the outcome of your e-commerce efforts.

At a recent industry roundtable, experts explained why the SKU strategy must be comprehensive, flexible and customer-centric. The following are excerpts from the discussion, which you can see in full below.

Complete SKU strategy

“Sometimes the ecommerce implementation team is seen as a disruptor. Oh, we need to make these changes to the SKUs for the website when they really should have done years ago. The SKUs need to do it. be assigned in such a way that the logic behind the numbering system will stand the test of time and not be vulnerable to internal or external forces such as growth and changes in the supply chain, ”said Eric Landmann and Erin Courtenay from Earth interactive during round table with Kris Harrington, President and COO of GenAlpha Technologies; and Dave Meyer, president of Bizzyweb; .

“One of the biggest problems arises when a salesperson adjusts the SKUs for the website but has not made the proportionate change in the ERP system. The only options left at this point are to completely transform the numbering system at each end so that everything fits, or to install middle manager technology that can translate between the two, ”said Landmann and Courtenay. Adding such tools to fix broken SKU strategy is an example of how underlying leaks in your foundation could lead to unnecessary expense and uneven architecture.

Flexible SKU strategy

“A great example of how short-term thinking can cause long-term headaches is a parts maker that had a 4-digit SKU system. It was good when they were only making ten products, but their inventory was multiplied by a hundred (with many variations on each product), but their SKU strategy remained at a 4-digit system. Even more problematic, the SKU assignment was sequential, so whenever they added a new variation to the product line, the numbering system could not allow grouping. For example, if they had a product with two colors [red knob sku3012; blue knob sku3011] and the next product in the original sequence was (black latch sku3013), what happens when they decide to release an orange button? ”said Landmann and Courtenay.

“Managing business SKUs is a differentiator for manufacturing companies and pays dividends on the marketing and sales side of the business. Items such as product description, categorization, specifications, images, weights and dimensions, price, availability, location of use and cross-reference data are important factors. Manufacturers should consider these factors when creating their SKU strategy, ”said Harrington.

Customer-centric SKU strategy

“Due to desire to protect product data, this led to limited business considerations or standards when creating and configuring SKUs. As manufacturing companies move towards digital transformation, the business information associated with a SKU is more important than ever. It’s time for manufacturers to look at sharing product data, rather than reacting to it. With that in mind, manufacturers must do the hard work of identifying all of the different elements of a SKU that will lead to customer confidence in their purchasing decision, ”said Harrington.

You can also improve customer confidence by eliminating the confusion caused by the time spent on the content that surrounds each SKU. “Think about all of the related information and searches – do this by searching for your SKU or product name, then checking“ related searches ”at the bottom of the search results page. Wherever it makes sense, be sure to add these related keywords in your product pages, meta information, and tags – the more context and connections you can create, the better, ”Meyer said.

“You have to think about how you will use SKUs on your website, across searches and within the interconnects of your distribution network. Your customers need to find your products, not only in direct search, but also in the context of the research they are doing. are likely to end their buying journey. Your product posts should include metadata in title tags, descriptions, links, images, etc. I recommend that you think about these common names, descriptions, and related products that you will use when you upload them SKUs into your databases and ecommerce tools, ”Meyer says.

Conclusion

While the SKU may appear to be just a number, it has deeper implications for your systems and processes if your SKU strategy is not comprehensive, adaptable, and customer-centric. These implications may not be immediately obvious to you, as they lead to issues such as increasing administrative expenses, conflict between teams, and longer delivery times.

So next time if you have any issues with your customer experience or operational efficiency, review your SKU strategy to rule out the possibility drive your administrative expenses. A simple solution like a redefined SKU strategy could be a solution to your current problems.

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