Goods – Cargo – SKU: what’s the difference?
We hear these terms every day, and sometimes we can think that this is all the same thing. But if you use them incorrectly, it can confuse warehousing processes. For the efficient and uninterrupted operation of the warehouse, it is important to know and use these terms correctly.
So, let’s start with the term – “goods”. It is an object of market relations, any purpose involved in the exchange (purchase and sale), has a price and meets the needs of the consumer. The main types of goods that can be in stock provided proper storage:
- pharmaceutical and cosmetic products;
- household appliances;
- various tools and equipment;
- building materials;
- furniture and interior items and more.
But when any operations to move the goods begin, the goods become cargo. So, cargo is products, materials or goods that are in transportation: lifting or lowering in vertical, horizontal or inclined planes, as well as transportation from the point of departure to the destination. Cargo also includes packaging, container and other equipment designed to protect the goods during movement.
And what about the term SKU? SKU stands for “Stock Keeping Unit”, which means:
- unit of warehouse accounting;
- warehouse unit of account;
- the storage unit that is in storage.
This is an identification number (article), which is assigned to a particular category or type of goods that have the same properties, shape and function. The same logic is applied to such goods for the processes of storage, transportation and package.
The SKU is sometimes represented by a barcode for scanning and tracking. Therefore, it is commonly referred to as UC (unique code), which is applied to wholesale, retail, or manufacturing operations. SKU can assist in monitoring transactions, tracking customer spending patterns, controlling inventory, purchasing and providing pricing information.
A common mistake is to use the term UPC instead of the SKU, which encodes individual items at the inventory unit level and allows the manufacturer or seller to track the number of these units sold over a period of time.
Production warehouses and warehouses of distribution companies, such as foodstuff, usually have a small range. And companies that sell auto parts, e-commerce, pharmaceuticals have from tens to hundreds of thousands of SKU. Typically, in warehouse management systems (WMS) for each item, at least one separate storage centre is required. And with a large range of SKUs are grouped by category into assortment matrices – for the convenience of managing the product category.
SKU is an effective product accounting tool for retail, merchandising and suppliers. It applies to any product and gives unlimited access to encode the required product characteristics.
Each of these terms – Goods, Cargo, SKU – is an important element of all warehousing processes and its proper use makes the work of staff more efficient and reduces the possibility of errors to zero. And the statistics which can be received by means of SKU allow increasing sales and as a result profit of the company.