What Is a Unit of Measure (UOM)?

A Unit of Measure (UOM) defines the standard quantity used to specify and track items in a business transaction. Whether you are ordering raw materials or shipping finished goods, the UOM establishes a shared understanding of how much is being sold, purchased, or transported. UOMs are essential for clarity across procurement, warehousing, and logistics teams.

Types of UOM

There are several types of UOMs, each reflecting different aspects of how goods are handled:

• Stocking UOM refers to how items are counted and stored in inventory. For example, a warehouse may stock shells by the “Box”, with each containing 25 shells.

• Ordering UOM is how items are specified in purchase orders. A buyer might order “5 Cases” of bottled water, while each case includes 16 bottles.

• Shipping UOM describes the unit used when goods are dispatched i.e., during packing, loading, and unloading. In international trade, weight-based UOMs like kilograms or pounds are common.

• Standard UOM is the baseline unit used across an entire system. It enables internal consistency by converting all other UOMs (shipping, ordering, and stocking) into a common reference. 

Examples of UOM

UOMs vary depending on the nature of the product. Some of the most common examples include:

• Weight: Kilogram (kg), Pound (lb)

Bulk coffee beans might be purchased by the kilogram, while deli meat at a supermarket is priced and weighed by the pound. 

• Volume: Liter (L), Gallon (gal), Cubic Meter (CBM)

Soft drinks are commonly sold in 2-liter bottles in retail stores, while bulk chemicals may be shipped in 55-gallon drums. For international freight and container shipping, CBM is often used to measure the total volume of space a shipment occupies. 

• Length: Meter (m), Inch (in)

Electrical wire might be stocked and sold by the meter in industrial supply, while a retailer might sell fabric by the yard or inch. 

• Count: Each (EA), Dozen (DZ), Case (CS), Pallet (PAL), Box (BX)

Light bulbs may be ordered by the dozen, soda cans by the case, and computer mice individually as each. Bulk warehouse deliveries often arrive palletized, each containing multiple cases or boxes. Some suppliers also define MOQs using these UOMs

• Area: Square meter (m²), Square foot (ft²)

Flooring materials such as tiles or hardwood planks are often sold by the square foot in the U.S. or by the square meter internationally. 

Importance for supply chains and procurement

UOMs are especially important in supply chains, where different stages of the process may use different units. For example, a supplier might dispatch fabric by the roll, while a warehouse might stock it by the meter. 

• In procurement, UOMs are vital for comparing vendor quotes, issuing accurate BOMs, managing costs, and generating reports. 

• In the warehouse, consistent UOMs ensure correct stock levels, speed up audits, and minimize shrinkage. 

• In transportation, shipping UOMs are used to calculate space requirements and shipping costs. 

• Across digital systems, UOMs are often encoded into product records, enabling automated calculations and validations in ERP or inventory software.

UOMs help manage expectations between suppliers, logistics providers, and consignees. When different teams, systems, or suppliers use inconsistent UOMs, coordination across the supply chain breaks down. You cannot accurately order, receive, or track inventory if the item setup does not match the unit used in the transaction. 

Challenges Relating to UOM

While UOMs bring structure, they also present a few challenges, including:

Tracking accurately 

A common issue in UOM usage is the confusion caused by incorrect assumptions and mismatched conversions. For example, the team might assume a measurement is in pounds when the supplier actually meant kilograms. 

Even when both sides recognize that different units are being used, applying an inaccurate conversion factor (1 kg = 2 lbs instead of 2.20462 lbs) can result in significant discrepancies in quantities, costs, and inventory tracking.

Ensuring all parties use the same UOM

Errors in UOM relationships, such as assuming that a case contains 100 units when it holds 40, can throw off stock counts, production planning, and financial reporting. These discrepancies may trigger backorders, delays in fulfillment, or emergency replenishment costs. 

Conversion complexity

Some items don’t convert cleanly between units. For instance, converting between volume and weight for liquid products depends on density, which varies. A supplier might deliver 1000 liters of crude oil, but the buyer’s system calculates payment based on weight. If they do not agree on density, the invoices will not align.

System limitations

Not all software systems support flexible UOM configurations. This can be especially limiting for companies operating globally, where imperial and metric units may both be used. 

The system may not allow UOM changes once transactions are open, offer limited support for complex conversions, or have weak controls to enforce consistent UOM use across processes.