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
 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.
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 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.

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 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.

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 • 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.

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 • 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

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 • 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

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 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?

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 Codification by Group
Classification
• What do we mean by coding
For instance, 010237 inventory kind of
gasket
E.g. classification of materials in an
inventories
 01-Raw material
 02-purchase components
 03-spare part
 04-tools
 05-other supplies
 Codification by Group
Classification
• Based on ‘shape’ of items
 1….Wire
 2….Tubing
 3….Rod
 4….Bar
 5….Sheet
 6….strip
• Like that the material of construction,
Group of classification, particular item
code be coded
• Nine digit code identify the finished
product
 Codification by Group
Classification
• Mnemonic Coding Method
 Number and alphabet used
 E.g. SH 015 60 mean
‘ a shunt, 150 amps., 60 m V.’

• Hybrid system of coding

 Group classification and mnemonic codes
 E.g. PI 1 1015
‘pipe, Vinyl hosepipe, 10mm.ID*15mm ED.’
 Methods of coding of
materials

• Alphabetical method
• Numerical method
• lAlphabetical-cum-Numerical method

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 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.

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 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.

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 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.

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 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
1 9 99 99
Raw-Material

Generic Group
e.g. Magnesite, Alumina

Sub-Generic Group
e.g.Fused Mag, Fire clay

Running Serial No.

e.g. 01
 Codification of Generic Item
2 99 99 999
Item Type
e.g. Stores

Generic Group (00-70)

e.g. Bearing, Switchgear

Sub-Generic Group
e.g. Ball Bearing

Running Serial No.

e.g. 201
Codification of Drawing/ Part No. Item
2 99 99 999
Item Type
e.g. Stores, Service

Generic Group (80-98)

e.g. Casting, Fabricated

Sub-Generic Group
e.g. Equipment Code

Running Serial No.

e.g. 001
 Codification of Capital Equipment
2 99 99 999
Item Type
e.g. Stores

Generic Group (99)

e.g. Capital Equipment

Equipment Class
e.g. Mixer, Press

Running Serial No.

e.g. 001
 Codification of Service Items
3 9 99 999
Service Item

Type of Service
e.g.Transportation, AMC

Sub-Group
e.g. Truck Load, Trailor

Running Serial No.

e.g. 001
Codification of Secondary Products
4 9 99 99
Secondary Products

Major Group
Mining Pdt, Metal Scrap

Sub-Group
e.g. Clay, Ferrous Scrap

Running Serial No.

e.g. 01
 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 .

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 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 .

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 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

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 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!

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