diff --git a/services/inventory/app/services/inventory_service.py b/services/inventory/app/services/inventory_service.py
index 6b18a0cc..b70fc143 100644
--- a/services/inventory/app/services/inventory_service.py
+++ b/services/inventory/app/services/inventory_service.py
@@ -7,6 +7,7 @@ from typing import List, Optional, Dict, Any, Tuple
 from uuid import UUID
 from datetime import datetime, timedelta
 import structlog
+import uuid
 
 from app.models.inventory import Ingredient, Stock, StockMovement, StockAlert, StockMovementType
 from app.repositories.ingredient_repository import IngredientRepository
@@ -46,13 +47,18 @@ class InventoryService:
             
             async with get_db_transaction() as db:
                 repository = IngredientRepository(db)
-                
+
+                # Auto-generate SKU if not provided
+                if not ingredient_data.sku:
+                    ingredient_data.sku = await self._generate_sku(db, tenant_id, ingredient_data.name)
+                    logger.info("Auto-generated SKU", sku=ingredient_data.sku, name=ingredient_data.name)
+
                 # Check for duplicates
                 if ingredient_data.sku:
                     existing = await repository.get_by_sku(tenant_id, ingredient_data.sku)
                     if existing:
                         raise ValueError(f"Ingredient with SKU '{ingredient_data.sku}' already exists")
-                
+
                 if ingredient_data.barcode:
                     existing = await repository.get_by_barcode(tenant_id, ingredient_data.barcode)
                     if existing:
@@ -1060,6 +1066,43 @@ class InventoryService:
 
     # ===== PRIVATE HELPER METHODS =====
 
+    async def _generate_sku(self, db, tenant_id: UUID, product_name: str) -> str:
+        """
+        Generate unique SKU for inventory item
+        Format: SKU-{PREFIX}-{SEQUENCE}
+        Example: SKU-FLO-0001 for Flour, SKU-BRE-0023 for Bread
+
+        Following the same pattern as order number generation in orders service
+        """
+        try:
+            from sqlalchemy import select, func
+
+            # Extract prefix from product name (first 3 chars, uppercase)
+            prefix = product_name[:3].upper() if product_name and len(product_name) >= 3 else "ITM"
+
+            # Count existing items with this SKU prefix for this tenant
+            # This ensures sequential numbering per prefix per tenant
+            stmt = select(func.count(Ingredient.id)).where(
+                Ingredient.tenant_id == tenant_id,
+                Ingredient.sku.like(f"SKU-{prefix}-%")
+            )
+            result = await db.execute(stmt)
+            count = result.scalar() or 0
+
+            # Generate sequential number
+            sequence = count + 1
+            sku = f"SKU-{prefix}-{sequence:04d}"
+
+            logger.info("Generated SKU", sku=sku, prefix=prefix, sequence=sequence, tenant_id=tenant_id)
+            return sku
+
+        except Exception as e:
+            logger.error("Error generating SKU, using fallback", error=str(e), product_name=product_name)
+            # Fallback to UUID-based SKU to ensure uniqueness
+            fallback_sku = f"SKU-{uuid.uuid4().hex[:8].upper()}"
+            logger.warning("Using fallback SKU", sku=fallback_sku)
+            return fallback_sku
+
     async def _validate_ingredient_data(self, ingredient_data: IngredientCreate, tenant_id: UUID):
         """Validate ingredient data for business rules"""
         # Only validate reorder_point if both values are provided