Should You Use Meaningful or Non-Meaningful Item Codes?

When companies start using new software, they often wonder whether they should change the way they assign codes to their items.

There are usually two possibilities here:

• The company uses meaningful codes, where particular characters in the code stand for something
• The company uses non-meaningful codes, where codes are most often assigned by starting from some number and counting upwards as new codes are opened

Meaningful codes

Assigning meaningful codes made sense in the past, when business software was not as developed as it is today. Meaningful codes are codes with a built-in logic that determines which characters go where.

For example, take an item bought from a manufacturer whose name begins with MA, made of plastic (PL) and black in colour (CR). Its code might be MAPLCR000123. That can look logical, and look as though it makes items easier to find, since you search for this one by typing MAPL and so on.

It can seem a rather efficient way of labelling items, but there are nonetheless several serious drawbacks:

• It is difficult in any software to automate code entry this way, which can significantly slow down the entry of codes for new items
• It is difficult to anticipate every case, so if a new manufacturer appears whose name also begins with MA, you have to find a new abbreviation
• You need clear written instructions on how these codes are constructed, so that staff do not make mistakes entering them

Non-meaningful codes

Non-meaningful codes are far more widely used today.

Codes like these are assigned without any particular logic behind the characters, and are most often sequences of numbers that count upwards as new items are entered.

The advantages of labelling items this way are:

• It is simple for the software to assign codes to new items automatically, so they do not have to be entered by hand
• Staff do not have to remember how items are labelled, which considerably reduces the scope for error

With codes like these, however, the items need describing more fully, by entering their important characteristics — manufacturer, catalogue number, the category and subcategory they belong to — in separate fields, as far as the software allows.

TiramisuERP supports both ways of entering codes, but we consider the non-meaningful system considerably more efficient.