Shri Chinai College

Of

Commerce and
Economics.
 PRESENTATION ON…..

Subject:- Material Management.

Sub Topic:- Codification and

Standarisation in
material management.
This project is presented by ……..

SYBMS – B Group No. - 6

Introducing the Group members :
1) Chauhan Maheshwari - 09.
2) Gupta Vineetkumar - 19.
3) Mody Hardik - 27.
4) Parikh Sumit - 29.
5)Shah Ankit - 39.
6) Shah Neha - 41.
7) Subramany Shruti - 49.
8) Waghela Manoj - 59.
 What is Material Management?

In any organisation, the material department plays an

important role of dealing with material. Material means
money. More than 60% of the money of the company is
handled by the material department itself. The objective of the
materials management are to buy materials and services of the
right quality, in the right quantity, at the right place, from the
right price, from the right source, and at the right time. To
purchase wisely involves a constant search for better values
that yield the best combination of price, quality and service.
Three important points in material management.
Codification in Material Management.
Any organisation stores a large number of items, often running into
lakhs. There should, therefore be, some means of identifying them. A
common practice is to describe them by individual names. Since
several department us the same item, they call the same item by
different names and store them in different places. One store-keeper
may classify an item as Sal Ammoniac, whereas a research chemist
might identify it by the name of Ammonium Chloride, only to be told
that it is not available. A classic example comes from U.K.: An
electrical firm found that a simple item of screw with the width of 3/8”
and length of 6” had as many as 118 names depending on the type of
usage and the department using that screw. A few names were plunger,
dowel pin, roller, locating peg, drive pin, pinion spindle, pin mould
holding, motor drive spindle, trip arm pin, armature stud, etc. A proper
codification removed the 117 stacking points with it the associated
inventories, entries, obsolete item, etc.
Examples of Codification

Debit Cards which

Bar Codes consists of certain
barcodes
Credit Card Swipe Cards used in
Offices

Credit Card
 Process of Codification

1. Codification is the process of representing each item by a

number, the digits of which indicate the group, the sub-
group, the type and the dimension of the item. It varies
from eight to thirteen digits.
2. The first two digits normally represent the major groups,
such as raw materials, spare parts, sub-contracted items,
etc.
3. The next two digits indicate the sub-group such as ferrous,
non-ferrous, etc.
4. Dimensional characteristics of length, width, head
diameter usually constitute the further three digits.
5. The last digit is reserved for minor variations.
 IMPORTANT POINTS IN CODIFICATION

1. Whatever may be the basis, each code should uniquely

represent one item.
2. Codification should be compact, concise, consistent and flexible
enough to accommodate new items.
3. As far as possible uniform dimension, say the metric system,
should be adopted.
4. It should be meaningful and oriented towards the needs of an
individual organisation.
5. The grouping should be logical, holding similar parts near to
one another.
6. Each digit must be significant enough to represent some
characteristic or aspect of the item.
 Systems of Codification

1. Kodak System.

2. Brisch System.
 KODAK SYSTEM
1. The Kodak system has been developed by Eastman
Kodak company of New York which consists of 10 digits
of numerical code.
2. The logic on major grouping is based on sources of
supply.
3. All materials are divided into 100 basic classifications,
contributed only by procurement considerations.
4. Each class is divided into 10 sub-classes.
5. For example, if class 20 represents cutting tools then 200
represents drills, reamers, counter bars, etc.
 Brisch System
1. The Brisch system named after a prominent consulting
engineer in the U.K. consists of seven digits and is
applied in three phase.
2. The items are grouped into suitable preliminary
categories, sub - assemblies, components, off the shelf
items.
3. After these preliminary categories, items are grouped
within the respective clans in order to bring similar
items together.
4. The Brisch system, though it only consists of seven
 Advantages of Codification
1. It enables systematic grouping of similar items and avoids
confusion caused by long description of the items.
2. Since standarisation of names is achieved through
codification, it serves as the starting point of simplification
and standarisation.
3. It helps in avoiding duplication of items and results in
minimisation of the number of items, leading to accurate
records.
4. Codification enables easy recognition of an item in stores,
thereby reducing clerical efforts to the minimum.
5. If items are coded according to the sources, it is possible to
bulk the items while ordering. To maximise the aforesaid
advantages, it is necessary to develop the codes with all
concerned, namely, personnel from design, production,
engineering, inspection, maintenance and materials.
 Standarisation
A standard is defined as a model or general agreement of a
rule established by an authority, consensus, or custom,
created and used by various levels of interest. For instance, an
individual may be the starting point of using the standard and
then his department will use the same standard to suit its
needs. The firm may similarly prepare, by consulting different
departments, a standard for guiding the activities. Related
industries in the industry group may also prepare industrial
standards. At the national level, by consulting the
manufactures, scientist, users and government departments,
national standards are involved. Such national standards are
presented and discussed to form international standards. The
standards could cover a variety of industries, such as
engineering, textile, chemical, pharmaceutical, agricultural as
also education. Purchase contracts, forms, sampling, testing,
safety measures, etc. come under standards.
Example of Standarisation

Nike and Adidas are considered as one of the most

reputed and standard company in sports wear.
Other Examples of
Standarisation
 Need for Standarisation

1. Standarisation is required not only for procurement of

the right quality of incoming material, but also for cost
reduction.
2. It will be remembered that considerable publicity was
given to large-scale cost reduction in material cost
through standarisation by US defence services under
the guidance of the then Defence Secretary, Robert S.
McNamara.
 Benefits of Standarisation
1. Standarisation helps reduce inventory items.
2. It helps in evolving better means of communication
about an item in the company.
3. It forms a base for further inventory analysis.
4. The specification of an item can be more clearly
spelled out, making quality control firm.
5. In a developing economy like ours, where the need
is to promote exports, insistence on standards helps
in creating confidence in the international market.
 Methods of Standarisation
1. Whenever published standards are available from outside sources
like Indian Standard Institution , the same can be applied .
2. The frequency distribution of demand for each type and size of an
item in terms of quantity of materials purchased/used/ or products
sold, would be an excellent starting point for standarisation and
variety reduction in an organisation.
3. For instance, consider the examples where the diameters in
multimeters of pipes are 5.0, 5.1, 5.2, 5.3, 5.4 and the past pattern
shows that only two sizes 5.1 and 5.4 are often used.
4. Then the orders from the remaining three dimensions can be
gradually discontinued if these items are not critical from
performance and safety angles.
5. A series of standard sizes in suitable steps used in bulbs and
currency – developed by Renaud are known as R-5, R-10, R-29, R-
 Items to be Standardised
The Warehouse and Inventory Manager should involve executives from
design, maintenance, inspection, operation and costing department in
order to ensure that the recommended standards are implemented. If the
standard is approved as a company standard, the standard department
should make necessary reproductions and distribute the copies as
mandatory to all concerned. Procedures, formats, reporting systems,
sampling inspection plans, letter heads, operating manual, standard
costing methods, etc. are some of the examples of standarisation. It is
easy to standardise items for which published standards by the Indian
Standard Institution are available. It is advantageous to tackle non-
critical high value, easily available items for standarisation, as
otherwise there will be opposition from the design departments. MRO –
Maintenance, Repair and Operation – items like fasteners, hardware
items, maintenance, etc. are a good starting point to impose
standarisation.
 Ten Points to Ponder
1. Identify the relevance of standarisation in warehousing and Inventory
Management.
2. Discuss the benefits of standarisation to different departments in the
organisation.
3. Explain how you will identify the items for standarisation.
4. Describe the procedure for standarisation.
5. Enumerate the pitfalls of standarisation.
6. Elucidate the application of the concept of frequency distribution to
standarisation.
7. Clarify the concept of preferred number series in relation to
standarisation.
8. Specify the interrelationship between standarisation, simplification
and specification.
9. Explain the role of Indian Standard Institution in development of
standards.
10.Examine the scope of standarisation in job shop, office and
administration.
THANK YOU.