What is a sequential coding scheme?

A sequential coding scheme refers to the method of assigning stock keeping units (SKUs) codes in a straightforward numerical order. This system is efficient because each SKU can be easily identified and tracked through a simple incremental number system, enhancing organization and ease of retrieval. Using such a numbering approach allows for systematic inventory management, where the first item physically received could be assigned the code '1', the second '2', and so on.

This method is practical for businesses, especially in environments that require straightforward categorization without complexity. Sequential coding is often used for items that are frequently added to inventory or have a straightforward relationship with production or sales volume, facilitating quick access to information regarding stock levels and movement.

In contrast, other options like assigning codes randomly or using unique letter codes may complicate inventory tracking and management rather than streamline it. Storing codes externally for security is not related to the concept of sequential coding, as it focuses on the method of code generation rather than their storage or security. The clarity and simplicity of sequential coding highlight its utility in effective asset management.