SQL Server 2022

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CREATE TABLE mytable(
   customer VARCHAR(100) NOT NULL  
  
);
INSERT INTO mytable
(customer ) VALUES 
('Smith partners limited'  ),
('Smith and sons' ),
('Smith plc' ),
('Smith and Co' );
4 rows affected

ALTER TABLE mytable
ADD code VARCHAR(100) ;
with t as (
select customer,code,concat(upper(left(customer,3))
  ,'00',
row_number() over (order by (select null))) code1
 from mytable
)

update t
set code=code1
4 rows affected

select * from mytable


customer
code


Smith partners limited
SMI001

Smith and sons
SMI002

Smith plc
SMI003

Smith and Co
SMI004

customer	code
Smith partners limited	SMI001
Smith and sons	SMI002
Smith plc	SMI003
Smith and Co	SMI004