Page 33 - DMGT525_MATERIALS_MANAGEMENT

Materials Management

Notes levels, and also in having a good control over the loss, deterioration, obsolescence,
non-movement, or pilferage of the items in the inventory. Unique identification of the materials
– whether they are raw materials, work-in-process or finished goods – is the first step towards
a good materials management system. Without it, the control over inventory by rigorous
exercises such as inventory techniques is not very effective. Without it, confusion might prevail
in the operational departments. Moreover for a good quality control system a unique
identification is a prerequisite. There are many other advantages such as variety reduction and
standardization, etc.
The various bases for the codification of inventory are:

 Who will be the user?
 To what use is the codification going to be put?
 What degree of mechanization will be needed to use the codification system?

3.1.1 Codification by Group Classification

What do we mean by coding? By this, we give a unique number to a particular item in the
inventory. For instance, 010237 might mean a specific item in inventory such as a particular kind
of gasket, of a certain material, of a certain shape, and of certain dimensions. Of course, each of
these numbers or groups of numbers (within the total identification number) should convey
some unique information.

For instance, classification of materials in an inventory by providing numbers to them:
01 – Raw materials
02 – Purchased components
03 – Spare parts
04 – Tools

05 – Fixtures and Patterns
06 – Other supplies
The next classification may be based on the ‘shape’ of the items. For instance:

1. Wire
2. Tubing
3. Rod
4. Bar
5. Sheet

6. Strip
Another classification can be on the basis of material of construction. For instance:
1. Mild Steel

2. Stainless Steel
3. Bronze
4. Aluminum
5. Special alloy

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