Item Numbering Best Practices For Your New ERP System

A question which invariably arises during ERP implementations is “should we change our item/part number format”. Item number format is one of the most controversial aspects of ERP system implementations.

In the past, companies added very complex structures to their item numbering scheme. This is a legacy from a time when modern ERP systems did not yet exist, and it was felt that there was a need to put a lot of “information” into the item number. This made sense when search capabilities were primitive, but that is no longer the case. Today’s ERP systems have a huge, or even an unlimited number of attributes available for various item parameters, and can index by any of them. Data storage is cheap and virtually unlimited, so that is never an issue anymore.

Adding “intelligence” to item numbers always adds length, complexity, and confusion to the simple need to uniquely identify items in a business system. As new items are entered, different users will invariably use slightly different methods. For example, one item where size is a parameter may have been created including “large”, and another may have been coded as “lge”. Over time, the numbering scheme becomes useless for indexing and analysis. In a modern system for example, there would be a size field and a color field which would only accept “large” and “blue” to be entered. An item search or sales analysis by those parameters would then include all large blue items, and only large blue items. There wouldn’t be any “lge” and “blu” items that would be missed.

A reason not to adopt item numbering best practices that I often hear is because users are familiar with the existing numbers. Given the modern business systems available, this concern doesn’t apply. Keeping to the “old” numbering scheme might seem easier, but it is almost certain to become burdensome and expensive in the future. When new employees are hired, they would have a much longer learning curve due to a complicated scheme which really has no purpose. In our example, they would merely enter “large” and “blue”, and they would see all of the appropriate items.

Many business processes will be changing because of the new system. That is, of course, one of the reasons it was purchased. Item numbering is just another part of the necessary change management that the project manager must oversee.

So, what do we need to consider when creating the new format? There are only a few basic rules of item numbering that should not be broken if at all possible. These are:

  • Never include any information in the item number that may change over time. An example of this might be product category.
  • Never adopt an item numbering scheme that comes from an external source, such as customers or vendors. If they ever change their item numbers, you will be forced to change yours.
  • Never use special characters or leading zeroes. These lead to transcription errors, and some software packages, now and in the future, won’t handle them properly.
  • Keep the part number to five digits with no leading zeroes, if at all possible. UPC codes are based on five numeric digits, and numeric is easier for data entry. If that isn’t possible, limit the number of characters, and have all of your part numbers be the same length.
  • Picking accuracy will improve if similar items have completely different item numbers, especially if they are not kept next to each other in the warehouse. Keep in mind that the new system is able to print picking documents sorted by warehouse location and bin number. A picker will never grab a visually similar item by mistake if one item number is 12345 and it is in aisle 24, and the similar item is 98765 and it is in aisle 4.

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