D365F&O: Should we follow Automated or Manual product numbers(SKU numbers)?

A real consulting reply may not be just “It depends on your business requirement”.

One of the crucial decision points that triggers much discussion in many D365 implementation projects(or maybe some projects?) is choosing between automated product number and manual product number.

Some projects might get a lucky escape if the client is pretty clear and wants to move forward with what they have in their existing system. This decision typically gets difficult especially when the client is following a manual number and wants to think of going on with an automated number or vice versa.

Both approaches have their own merits and drawbacks, and the right choice depends on the specific needs and circumstances of your business.

Let us examine a few important pros and cons of both these approaches.

Automated number:

Pros:

1. Consistency : Automated product number ensures consistency across the broad.

2. Efficiency : Speeds up the process of creating new products as users do not need to brainstorm to decide what number to be assigned.

Cons:  

Many times automated numbers just act as dumb numbers as they are not useful and also they are hard to remember.

Manual Product Numbers

Pros:

1. Descriptive and Meaningful : Manual numbers can be created to include meaningful information about the product (e.g.,category, Finished product\raw material etc.,), making it easier for staff to identify products at a glance.

2. Flexibility : Greater flexibility in creating and managing product numbers, allowing for custom schemes that might better fit the business’s specific needs.

Cons:

1. Time-Consuming : Manual entry can be slow and labor-intensive, especially for businesses with large or fast-changing inventories.

2. Risk of Human Error : Higher risk of errors in assigning numbers, which can lead to duplicate numbers, missing products, or inconsistencies.

Project experience:

1. The client is a large conglomerate with 10 legal entities using 4 different ERP systems across these companies. The project’s main objective is to get all these entities onto D365 F&O system. From the Products management side, manual product numbers are used in a few companies and automated numbers in others.

2. They have intelligence built into the manual product numbers that give them an understanding of the category of product, raw material\finished product\sub assembly identifier and if the product is transacted within the sibling companies etc.,

3. The decision was difficult as some companies wanted to continue the manual numbers because users across the company are comfortable with those and it gives them quick info about the products.

4. Complexity : Few companies within the group were dealing with similar set of products. Ex; Company1 and company4 have a major number of common products that they deal with and similarly company2 and company6 have some other set of products that are common in both.

5. Client envisions for centralized procurement wherever possible especially stationery and other consumable to be procured centrally and distributed to all the sibling companies.

6. When the stock of an SKU is unavailable in a company, they must look at the stocks of the SKU in the group companies.

What we decided?

It’s Automated product number:

While we really loved the intelligence they used in the product numbers and how that was helpful to them in various processes, we had to still go for automated numbers primarily keeping in mind the point4, 5 and 6 mentioned above.

During the user interactions, we did foresee that users of different companies may create duplicate products for the same SKU to reflect their company’s nomenclature built into the product number which is a bigger risk and that defeats the main objectives.

Things to keep in mind when deciding the Auto or manual product number.

1. Educate the client’s team on the Pros and Cons of both approaches(listed in the article are the top few).

2. Suppose product creation and management are done centrally and only limited users are responsible for product creation. In that case, you might continue to recommend the manual product numbering because the chances for human errors are less. (Provided you see intelligence in their product numbers and that benefits larger users\processes)

3. If the business is Manufacturer driven, it may make sense to go for Manual numbering.

Ex: We implemented D365 to a large IT\networking equipment distributor that deals with CISCO, NOKIA, and Samsung networking products. Since each SKU has its dedicated supplier we used the SKU number provided by the manufacturer as our product number. This gave us consistency throughout the purchase and sales cycles. When the products are sold to the resellers the same manufacturer’s SKU number is seen by resellers which makes it easy for resellers to review the features and other details of the products in company provided catalogues.

4. Especially when the client uses manual numbering and you got to recommend automated number, be clear with the implications.

Ex: There are multiple forms, inquiries and reports within D365 F&O that would just show the product numbers and not the product name. This makes it difficult for users as the auto generated product number is dumb.

5. In the product number lookups, you might have to add some additional fields that may get  you the quick buy-in if you want your client to switch to automated number.

To conclude : If you ask me whether to follow automated numbering or manual numbering for products….

The answer is “Well, It depends on your business requirement 😛 “

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