What you need to know about product codes and SKUs

What are product codes and how should they be structured? These are common questions when setting up a warehouse for the first time. In this blog, we answer those questions.

What is a product code?

A product code is a unique number that refers to a specific product. In English, it's often called an SKU, which stands for Stock Keeping Unit. There is no standard way to create product codes, so you're free to decide how to structure them. However, it’s important to think it through in advance because changing codes later can lead to confusion.

Product codes help prevent confusion

A product code or SKU should always refer to just one product, helping to avoid misunderstandings. For example, a single product might be a "Hema women’s t-shirt blue size L." The product code should also cover all options like size and color. A customer should be able to place an order using just the product code, and you should instantly know which item they mean without asking follow-up questions.

The easy way: use manufacturer product codes

If the products you purchase already have clear product codes from the manufacturer, it’s often easiest to use those. You won’t have to invent codes yourself, and the manufacturer’s codes are already printed on packaging. It also makes purchasing easier.

If you choose to create your own codes, keep the following tips in mind:

Don’t start with a zero

Avoid product codes that begin with a zero (0). Many programs, such as Excel, remove leading zeros, which can result in inconsistencies like using 00876 in one place and 876 in another. Starting with a non-zero digit prevents this issue.

Choose a fixed length

For consistency and readability, it’s helpful to make all your product codes the same length, for example always 8 characters. If you use separators, always place them in the same position, like 872.87-771 and 325.65-355.

Sequential or structured codes

Whether you start with something simple like 1 and increment by one, or use structured codes, depends on your preferences. Each approach has pros and cons.

Sequential codes

You might start with A000001 for your first product and continue with A000002 for the next. This keeps things simple and chronological, showing the relative age of a product. However, this method doesn’t group similar products together in lists, so sorting is better done by product name. For example, a new red version of product A000119 might become A002162 simply because it’s the next available number.

Structured codes

The more common method is to use structured sequences, where elements like product category, brand, color, and size are embedded in the code. For example:

• 2 digits for the product category (e.g. 12 for pants)
• 4 digits for the product model (e.g. 4322 for G-star 301 2013 EU version)
• 2 digits for size (e.g. 04 for Large)
• 2 letters for color (e.g. NB for navy blue)

This makes the product code 12432204NB, or with separators 12.4322.04NB, which refers to the “G-star 301 pants, 2013 EU version, size L in navy blue.” This method makes sorting easier and helps your team and customers recognize patterns—for instance, knowing that 12 means pants and 04 means Large.

One downside to fixed formats is the potential for outgrowing them. For example, you might start with just one digit for size, thinking you only need 7 values, but two years later you may need more. Make sure to leave enough room for future variations.

You define your own structure since every type of product has its own characteristics and will need a different format.

Picqer supports you

In Picqer, each product code must be unique. We support any product code you can think of, up to 250 characters long, including separators and leading zeros. You can also save the supplier’s product code in Picqer, in case you use a different internal code.