Codification Stores

Codification of Material in Stores

Presented by

Priyanka Chugh

Codification of Materials• It is also called as Identification of material

• Useful in operation department

• Record of each of the item

• Proper stock-taking a good identification is of immense help

• Proper codification of inventories item

• Codification is important for proper material handling and store management

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INVENTORY AND ITS CLASSIFICATION

• Inventory:All the items used in an organization is termed as inventory.

• Classification of inventory:Items an organization are classified into groups of materials. Items in the group are very close to each other from technical considerations. Inventories can be broadly divided into three categories, i.e.- Regular inventory items for production activities.- In-process inventories.- Finished goods inventories

• The classification of the inventory in different categories should be such that helps various activities such as stock control, purchasing, receiving of materials, storing, accounting and codification.

CLASSIFICATION OF MATERIALS• • Classification is the grouping together of materials of technical

affinity • These are divided into smaller categories for convenience.• 1. Purchase department: separate enquiries can be issued for

specific groups or materials since separate purchase requisitions can be made of each group .

• 2. Materials can be rooted to appropriate stores for stocking materials group wise.

• 3. Inventory control: stock control cards can be grouped together for materials of the same nature.

• 4. Stores: receipts& issues can be posted correct by coding or goods receipt notes.

• 5. Accounts: the GRN’s can be entered on the correct cards

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CODIFICATION

Codification is used to describe an item in short, thus avoiding long statement every time the need to describe the item arises.

CODIFICATION

Every item group under classification should have a material code no or reference no, it specifies what the material is it . It helps by:

• 1. Accurate identification of items. • 2. Long descriptions with detailed

specifications.• 3. Accurate posting of receipt & issue

documents in the appropriate records.


• This deals with uniquely identifying each item in the inventory .

• It is useful in requisitioning items for the operational department ,in receiving and expediting the items on receipt from the suppliers, in having a unique record of each of the items in stores and in work in process or in warehouse so as to facilitate the inventory levels , and also in having a good control over the inventory levels ,

• helps in having a good control over the loss ,deterioration ,obsolescence, non-movement or pilferage of items in the items in the inventory .

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Importance

• The stores department of big organizations carries a number of items of different grades and specifications. It generally faces the problem of locating and identifying the items at the time of storage and issue.

• Delay due to difficulty in locating an item causes production hold-ups. There is also possibility of the same item of two different grades getting mixed up, thereby providing a wrong account of the stocks of both the items. Therefore, everyone feels to have his or her goods properly classified.


• Materials are classified according to nature

in appropriate categories, e.g., Materials related with engineering are classified as bronze, copper, steel, and mild steel etc., and each category is further classified suitably.

• To save time in handling of materials, a written document known as material manual, is prepared in which description and code number to each store item is given


• Codification of materials also helps in :

(i) In absence of coding the title of an account may have to be written a number of times. This results in avoidable clerical work, particularly in case of lengthy account titles.

(ii) Secrecy about the exact nature of the transaction from the office employees is maintained


Basis of codification

• Who will be the user?

• To what use is the codification going to be put?

• What kind/degree of mechanization will be needed to use the codification system?


Codification by Group Classification

• What do we mean by coding For instance, 010237 inventory kind of

gasketE.g. classification of materials in an

inventories 01-Raw material02-purchase components03-spare part04-tools05-other supplies


• Based on ‘shape’ of items1….Wire2….Tubing3….Rod4….Bar5….Sheet6….strip• Like that the material of construction,

Group of classification, particular item code be coded

• Nine digit code identify the finished product


• Mnemonic Coding MethodNumber and alphabet used E.g. SH 015 60 mean ‘ a shunt, 150 amps., 60 m V.’

• Hybrid system of coding Group classification and mnemonic codesE.g. PI 1 1015 ‘pipe, Vinyl hosepipe, 10mm.ID*15mm ED.’

Methods of coding of materials

• Alphabetical method

• Numerical method

• lAlphabetical-cum-Numerical method



Alphabetical method

• In this method first alphabet letters are used for codification of each category of materials. For example, steel wire is coded as SW or steam coal is coded as SC etc.

Alphabetical-cum-Numerical method

• In this method, a combination of these two methods is used for coding of materials. For example, a steel wire of gauge 4mm quality A stored in rack/bin No.22, is given the code number SW4A/22. Such a method gives exact information than any of the above two methods.


Numerical method

• This method is used where materials accounting is to be mechanized by use of punched cards or computers. For numerical coding a list is prepared for various departments and allotting to each of them a suitable number. The first two digits of the code number represent the department for which the materials are meant and other two digits state the name of material as mentioned in the standard list or materials manual. For example, if code is 2341 it means Material No.41 [copper wire] is to be used in Department No.23.


Generic Item

Generic Item is defined as part or item, which is identified by its generic name / Size / Standard specification and are used as standard item across Industries. These may or may not form part of the equipment.

Example:- Bearing, V-Belts, Switchgears, Motors, Fuels, Oil, Lubricants, Electrode, Jute-felt, Pallets, Tools

Codification of Raw-Material

Raw-Material

1 9 99 99

Generic Groupe.g. Magnesite, Alumina

Sub-Generic Groupe.g.Fused Mag, Fire clay

Running Serial No.e.g. 01

Codification of Generic Item

Item Typee.g. Stores

2 99 99 999

Generic Group (00-70)e.g. Bearing, Switchgear

Sub-Generic Groupe.g. Ball Bearing


Codification of Drawing/ Part No. Item

Item Typee.g. Stores, Service

2 99 99 999

Generic Group (80-98)e.g. Casting, Fabricated

Sub-Generic Groupe.g. Equipment Code


Codification of Capital Equipment

Item Typee.g. Stores

2 99 99 999

Generic Group (99)e.g. Capital Equipment

Equipment Classe.g. Mixer, Press


Codification of Service Items

Service Item

3 9 99 999

Type of Service

e.g.Transportation, AMC

Sub-Group

e.g. Truck Load, Trailor


Codification of Secondary Products

Secondary Products

4 9 99 99

Major Group

Mining Pdt, Metal Scrap

Sub-Group

e.g. Clay, Ferrous Scrap


Characteristics of Good Coding System

Flexibility- last long time to derive

proper benefits from it. long term requirement should be kept in mind while providing the digits or alphabets for the items.

Precision

Precision - should have unique code for each item.

A proper dictionary or vocabulary for the decoding should be made while installing a codification system

The number of letters or digits should be the same for all items .


Brevity

• Brevity-the numbers of letters or numbers should not be too large so as to lose its immediate meaning to the material.

• 7-10 digits or spaces are adequate for many of the coding systems .


Comprehensiveness

• While classifying and sub-classifying the items for coding purposes, the nature of the items ,its specification, its end-use and suppliers etc should all be comprehensively taken into account


Standardization of Materials

• Codification helps in the standardization of item in the inventory

• Reducing the variety of inventory to workable minimum

Thank you for your attention!


Codification Stores

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