What are Stock Keeping Units?

First of all, let’s explain what a Stock Keeping Unit (SKU) is in Business Central. SKUs allow you to track quantity and cost beyond the base item. Examples of the use of SKUs include an item by location or variant (color).

How can a SKU help my business?

Many businesses have multiple locations that may not all have the same stocking levels for an item. SKUs allow item ordering controls to be defined by location; this allows for more specific ordering controls per location.  Business Central will also allow you to keep costs per location.  The location that is buying at the last minute may have a higher unit cost than the location that is using better ordering controls.  Also, if you are keeping landed costs, the location that is further from the supplier will have a higher cost due to increased freight costs.

Stock Keeping Units by Variant or By Location

SKU by variant is a way to track and set ordering controls per variant. It allows the user to quickly see how much of a particular variant of an item is in stock or on order.  Also, as SKU tracks the usage, the user can analyze which variants are moving better than others.

Business Central will allow SKUs to be setup per location /variant, giving even more control over inventory and costs.  It should be noted that Stock Keeping Units require that the controls be setup and monitored, so setting up too many SKUs may result in information overload and too much time to maintain.

Stock Keeping Units also come with an additional ordering method – “Transfer.” You can setup a SKU to have its inventory supplied by another location. Demand will then create a suggested transfer rather than a purchase or production order.


As a rule, I look at if the client has multiple locations or deals in products with colors or sizes. I encourage them to consider Stock Keeping Units.

Have any questions or comments on Stock Keeping Units? Please don’t hesitate to Contact Us and feel free to connect on LinkedIn and Twitter! Want to read more on Business Central? Check out our blogs Advanced Power BI for Dynamics 365 Business Central and Five top things I am thankful for about the Wave 2 Business Central Update.

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