Item Numbers, Part Numbers, SKU Numbers...
Updated: Nov 28, 2022
Whatever you call item numbers, part numbers, or stock-keeping units (SKUs), they are essential to the daily operation of your business. They are an ongoing, evolving, and ever-changing list of the items you continuously purchase, receive, issue, and sell.
It is a rare occurrence where a new business has the luxury of sitting down and designing a numbering schema from the ground up for every conceivable item before opening the doors for business. In reality, it is more likely that the item number assigner at your company inherited all of the previous incarnations of a schema designed by others and must manage all new numbers in the future. Therefore, the numbering system, or "Schema," must be flexible and scalable to accommodate the changing and future needs of the business.
Number duplication problems
A need arises at your company, and the user cannot find the item number in the database. So the item number assigner at the company searches the database and, after scanning a few lines of items, determines that there is no item number and a new one needs to be assigned. It turns out that the original item number was in the database, after all, so now there are two, or more, identical items in your database with the exact fit, function, and form. If this sounds familiar to you, you may need an overhaul.
There are three basic types of numbering schemas;
Non-Significant/Non-Intelligent Schemas- These numbers have no meaning and cannot be deciphered by just looking at them. They are sequential or serialized numbers. Like Purchase Orders, Sales Orders, and Invoice Numbers, most business software will allow you to assign a new item number to the following available number. Thus, your item numbers will appear as 100001, 100002, 10003, etc. This method solves the immediate problem of creating a new number in the system right away, but it is not very useful downstream without the description next to it. Therefore, caution needs to be exercised when creating the item descriptions. Older Enterprise Resource Planning (ERP) systems often process reports based on item numbers and ranges, not item descriptions. Such a schema is more likely used in retail and not in manufacturing environments.
Significant/Intelligent Schemas- Significant numbers are item numbers where the item number itself has a meaning and can usually be deciphered by looking at it. A simple example of this is a machine screw created as 832X1RHSZP. The description would read "8-32 X 1" Round Head Slotted Zinc Plated." In manufacturing and warehouse environments, this is incredibly useful. This schema type also simplifies product labels, barcodes, bin location labels, and other identification once the staff learns the system. In addition, the real estate required for printed labels, documents, and tags is significantly reduced by not always need the full description. Word of caution: Always create raw material commodity item numbers for what item you hold in your hand. Do not be tempted to make a numbering schema based on where it is used. Sooner or later, the original intent of the item number will be discarded, and now it is being used elsewhere, and you end up with a number that makes no sense. Bills of Materials solve the where-used question.
Hybrid System- The hybrid system is a combination of the above two. An example of this is when commodities are broken down into categories of commodities type and assigned a 2 or 3-digit prefix. An example would be the two-digit prefixes 00-99 and 000-999, respectively. This schema has tremendous growth and expansion capabilities. The prefixes are commodity type, which is the significant portion. The non-significant part would be everything after the dash. Ex: 031-100002. If all resistors in your database start with the 031- prefix, this is much more useful to everyone.
Roger Pujol is a business improvement consultant and founder of Champion Business Solutions, LLC. He speaks and writes about encounters helping small to medium-sized businesses (SMBs) improve their business operations.
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