Assigning Item Numbers
Disclaimer: Having a good item number naming process is a simple concept, which might seem obvious, but can actually get pretty complicated with the wrong naming convention. Complicated item number conventions usually don’t work well, and lead to inefficiencies in a supply chain.
Use item numbers to manage your products
Oftentimes companies will start out by identifying their products by their descriptions. Does this sound like your business? While this might work fine when you have only a few items, as you start to introduce new products into the market and work with new suppliers, you might accidentally alter those descriptions, or your products might be very similar, so their descriptions will be too similar. This can lead to suppliers producing the wrong products, or you shipping the wrong item to your customers. Simple mistakes make the biggest impact. Use item numbers to be very matter a fact about what product you are talking about and minimize confusion.
Picking an item number naming convention
Establishing an item number naming convention is an important task for any supply chain team. You want to establish an item number naming convention that can scale to multiple product lines, have plenty of flexibility in the number of variations you sell, and most importantly be simple that you can easily explain to someone. Also it’s worth noting, item numbers are hard to change once they are established. You will submit your item numbers to other companies, partners, and even customers, and you’d be surprised how hard it is to change these once they are out there.
Here are a couple examples of item number naming conventions I like:
Option A: Simple naming convention. Use a 2 letter acronym and then count up starting with 10001. Example:
Item Number
AB10001
AB10002
AB10003
AB10004
AB10005
Your 2 letter acronym can stand for what product category you are in. So if you are a furniture company and you sell chairs, tables, and benches, your item numbers can be CH-, TB-, BE-.
Option B: A more complex naming convention. You can make a sequence of codes to better identify the item by its item number. Example:
[Product Category] – [Product Size] – [Additional Field] – [Additional Field]
So your item naming convention might be:
[Chair] – [Small] – [Pine Wood] – [4 units]
CH-SM-PW-4
I prefer option A.
Stay disciplined to your naming convention
It is critical to stay disciplined about using one item number naming convention, and not introducing additional naming conventions. Your business should have one naming convention that other businesses you work with will recognize as yours. Once you introduce a 2nd naming convention, you add a layer of complexity. It might make sense to you as the brand because you created the additional conventions, but you have to remember you are likely working in a network of partners, who are also working with a lot of other customers. You want them to recognize and understand your item numbers so they don’t lose your products, accidentally assign your products to a different customer, or receive and ship things as the wrong item. It should be simple.
Another pro tip about staying disciplined to your naming convention: It’s often best on a team to have one person in charge of naming items, that way they stay focused on sticking to the convention. Have that person put together a single google sheet document that explains the item naming convention.
Item numbers for existing products should not change
And the last part of my item number rant is that item numbers for finished goods should not change. You should have your item numbers match how you advertise your products to customers. If you make a change to a product and advertise it as a brand new product, then you should assign a new item number to it. Otherwise do not change the item number for an existing product. A good way to think about it is would you ever sell those two items as unique items? If the answer is yes, then assign a new item. If no, then it’s the same item number. Thi will lead to less confusion with inventory management and purchasing.
Summary
Item numbers are a seemingly small decision when you are first starting out, but they are a very important part of your supply chain. Here’s a summary incase you didn’t read every word:
Creating item numbers for your products is necessary and minimizes confusion.
Pick a naming convention that can scale. I prefer simple naming conventions like option A.
Remember that changing item numbers once they are established is harder than you think.
Stay disciplined to keeping to your naming convention and have only one naming convention.
Have one person in charge of naming items and have them document how the convention works.
Item numbers for existing products shouldn’t change. If you make a new product that you could sell in parallel to existing products, it’s a new item number.
