Page 36 - DMGT525_MATERIALS_MANAGEMENT

Unit 3: Codification and Standardization

2. Alphabetical Method: In this method alphabets or letters are used for codification of each Notes
category of materials. Accordingly each letter or alphabet is allotted for each item or
material. For example: ‘C’ for copper, ‘S’ for steel and so on.
3. Numerical cum Alphabetical Method: This method is done by a combination of numerical
and alphabetical method. Under this method both numerical along with alphabet is allotted
for each item. For example, IR 5 may indicate Ink Red of Grade 5, Steel wire 6 may be
denoted by SW 6 etc.

Task Formulate a coding system which you think can be effective in inventory
management and has all the characteristics that a good coding system should have.
Self Assessment

Fill in the blanks:
9. Under ………………. method, each number or numerical digit is allotted to each item or
material.

10. …………………. method is used where materials accounting is to be mechanized by use of
punched cards or computers.
11. Under ……………… method both numerical along with alphabet is allotted for each item.

3.4 Standardization and Its Benefits

Standardization enables the materials manager to achieve overall economy and ensures
interchangeability of parts. With standardization more than one manufacturer can supply and
this will imply better availability, better price and better delivery. Standardization also implies
routinising purchase efforts, less stock and hence less obsolete items. It also means less inspection
efforts; as a matter of fact, many organizations do not check routine items bearing ISI marks in
a very detailed manner, but resort to inspection of only a small fraction of items. It is also
possible to enter into rate/running contract with standard items. This facilitates the production
planning and economic lot-sizing at the supplier’s end.

Did u know? The process of standardization logically leads to simplification or variety
reduction. This implies reducing unnecessary varieties and standardizing to the most
economical sizes, grades, shapes, colors, types of parts and so on.



Caselet The Problem with Cloud Computing Standardization

loud computing has become an increasingly popular approach in recent years,
with seemingly nothing but ongoing growth in its future. However, some industry
Cobservers say that the rapid growth has caused, and is also threatened by, the
failure of comprehensive cloud-computing standards to gain traction, despite the many
groups working on them.
Contd...

LOVELY PROFESSIONAL UNIVERSITY 31