Page 32 - DMGT525_MATERIALS_MANAGEMENT

Neha Tikoo, Lovely Professional University
Unit 3: Codification and Standardization

Unit 3: Codification and Standardization Notes

CONTENTS
Objectives
Introduction

3.1 Basis of Codification
3.1.1 Codification by Group Classification
3.2 Characteristics of a Good Coding System

3.3 Types of Coding
3.4 Standardization and Its Benefits
3.5 Summary
3.6 Keywords
3.7 Review Questions

3.8 Further Readings

Objectives

After studying this unit, you will be able to:

 Define Codification and Standardization
 Discuss the Various Bases for Codification
 Explain the Characteristics of Coding Systems
 Discuss the Different Types of Coding
 Explain the Benefits of Standardization

Introduction

Previous unit dealt with the concept of ABC analysis and its purpose and advantages in materials
management. In this unit, you will study about codification and standardization in the context
of inventory.
Codification/cataloguing is basically an identification system for each item of the inventory.
Standardization supports the fundamental precepts of build-to-order and mass customisation.
Standardization makes it easier for parts to be pulled into assembly (instead of ordering and
waiting) by reducing the number of part types to the point where the remaining few standard
parts can receive the focus to arrange demand-pull just-in-time deliveries.

3.1 Basis of Codification

Codification of materials can also be termed as the identification of materials. This deals with
uniquely identifying each item in the inventory. It is useful in requisitioning items or the
operational departments, in placing of orders by the purchase department, in receiving and
expediting the items on receipt from the supplier, 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 control over the inventory

LOVELY PROFESSIONAL UNIVERSITY 27