Understanding SKUs: How Level SKUs Impact Inventory Forecasting

The term SKU (Stock Keeping Unit) pertains to a product and identifies the most detailed disaggregate description of the product. An SKU will correspond to detailed and specific product descriptions, and you are able to to freely exchange two product items with the same SKU identification without any issue. 

 The reason that SKUs are so important is simply because they aid with inventory management and control with ease. It allows warehouses to be able to determine what products are in the warehouse, where they are located, and ultimately when they are fulfilling an order and are transported out of the warehouse. Essentially, it makes tracking mountains of products much easier. As businesses record historical data on the SKU level, any good inventory forecasting software solution will be based on the analysis of past sales data on a similar level. They will usually conduct forecasting on an SKU level too. This method of producing inventory forecasts has some advantages as well, considering that it usually is more precise for aggregate forecasted demand. When attempting to implement a solid SKU plan into your business, there are many benefits that need to be considered as well. 

Benefits of Implementing a Solid SKU Plan Into Your Business 

The benefits pertaining to implementing a solid SKU plan into your business include the following: 

• Improved Work Efficiency - Understanding the movements of SKUs can greatly enhance the way work is conducted within a facility. Utilizing SKUs aid internal individuals with establishing thorough visibility into the operation and how products move. 
  
  
• Reduced Communication Errors - Communications errors are a substantial issue within manufacturing operations. Having to deal with long product names and attributes may cause communication errors and ultimately affect the workflow. SKUs aid with this process through reducing the occurrence of errors or any misunderstandings. 
  
  
• Inventory Management - Inventory management depends on having proper and adequate reorder points set on each variant. Utilizing SKUs allows you to be able to manage your inventory with ease and ultimately improves the efficiency of your inventory. 

A software that can aid with your product process and the flow of product throughout your warehouse includes PlanetTogether’s Advanced Planning and Scheduling (APS) Software. Advanced Planning and Scheduling (APS) Software allows manufacturers to be able to establish thorough insight into their operation and locate any areas that are in need of efficiency enhancement, cost reduction, or profit increase. APS Software is a must for modern-day manufacturing facilities seeking to maintain a competitive edge within their industry. 

Advanced Planning and Scheduling Software 

Advanced Planning and Scheduling (APS) software has become a must for modern-day manufacturing operations due to customer demand for increased product mix and fast delivery combined with downward cost pressures. APS can be quickly integrated with a ERP/MRP software to fill gaps where these system lack planning and scheduling flexibility and accuracy. Advanced Planning and Scheduling (APS) helps planners save time while providing greater agility in updating ever-changing priorities, production schedules, and inventory plans.

• Create optimized schedules balancing production efficiency and delivery performance
• Maximize output on bottleneck resources to increase revenue
• Synchronize supply with demand to reduce inventories
• Provide company-wide visibility to capacity
• Enable scenario data-driven decision making

Implementation of Advanced Planning and Scheduling (APS) software will take your manufacturing operations to the next level of production efficiency, taking advantage of the operational data you already have in your ERP.

Video: Capacity Planning with APS for SKU-Level Forecasting

In this video, you’ll see how PlanetTogether Advanced Planning & Scheduling (APS) turns SKU-level inventory forecasts into realistic capacity plans and production schedules. Because each SKU (Stock Keeping Unit) is tracked individually for inventory and sales, planners need a way to translate detailed SKU forecasts into actionable production and capacity decisions—without relying on spreadsheets or guesswork.

You’ll learn how APS helps manufacturers:

– Use SKU-level demand forecasting data to build capacity-aware production plans

– Synchronize supply with demand to reduce inventories while avoiding stockouts

– Maximize output on bottleneck resources so you can support a growing SKU mix without adding more equipment

– Provide company-wide visibility to capacity, inventory, and SKU movements, improving communication between planning, operations, and warehousing

This video is ideal for demand planners, inventory managers, and production schedulers who want to connect SKU-level forecasting with APS-driven capacity planning to increase efficiency and profitability.

 

Turn SKU-Level Forecasts into Smarter Inventory & Capacity Decisions

Understanding SKUs and forecasting at the SKU level is essential for accurate inventory planning—but it is only the first step. To truly improve efficiency, reduce stockouts, and avoid excess inventory, demand planners need a clear way to translate SKU-level forecasts into inventory policies and capacity plans that operations can execute.

Download our Demand Planners Infographic to see how demand planners can:

• Use historical SKU-level sales data to generate more precise forecasts and reorder points
• Improve inventory management by aligning safety stock and replenishment rules with real SKU behavior
• Reduce communication errors by standardizing how products are identified and discussed across teams
• Feed clean SKU-level forecasts into Advanced Planning & Scheduling (APS) to create capacity-aware production schedules
• Support higher product mix and faster delivery expectations without losing control of inventory or production costs

Share it with your demand planning, inventory, and operations teams as a quick visual guide to turning SKU-level forecasting into a practical, APS-driven planning advantage.