Classification and Codification

CLASSIFICATION AND

CODIFICATION

ABHINANDAN SAWANT ROHAN MATHKAR

RUTUJA WAGHSANDEEP TAJANE

CLASSIFICATION &

CODIFICATION

CLASSIFICATION

CLASSIFICATION

• Classification of materials is the process of grouping of items into few categories, according to some criteria.

• Example: Classification of domestic articles into cloths, kitchen wares, grocery, electrical gadgets, furniture, consumables, non-consumables, etc.

• Why? – Handling of large number of items – planning, procurement, storage, accounting becomes difficult, if each one of them is handled separately. So some sort of Classification is must.

CLASSIFICATION

Classification of materials is the process of grouping of items into few categories,

according to some criteria.

Why Classify ???

Handling large no. of items

Planning

Procurement

Storage

Accounting

OBJECTIVES OF CLASSIFICATION

Classification of materials is required to –

• Evolve procedures of planning and control of materials in a class.

• Decide systems of storage and issue of materials in a class.

• Devise accounting and evaluation procedures common to all materials in a class.

BASIS OF CLASSIFICATION

Materials are classified according to followingbasis:

• Stage of conversion process

• Nature of materials

• Usability of materials

CLASSIFICATION ON THE BASIS OF STAGE OF CONVERSION PROCESS

CLASSIFICATION ON THE BASIS OF NATURE OF MATERIALS

1. Raw Materials

2. Consumables

3. Chemicals

4. Inflammable Items

5. Furniture

6. Perishable Materials

7. Packaging

8. Empties

9. Supplies

RAW MATERIAL

DIRECT

• Identified as Individual product.

• Charged directly to cost of product.

• Ex:

1. Cloth in garment manufacturing.

2. Steel in scooter manufacturing.

3. Ink & glue in paper manufacturing.

INDIRECT

• Unidentified with the individual product.

• Not charged to the cost of the product.

• Ex:

1. Coolants used in machines.

2. Cotton waste used to clean machines after work.

3. Sand paper used for polishing.

CONSUMABLES

• Materials which either cease to exist or change their shape during manufacturing process.

• Cannot be used for second time.

• Ex: Coal, lubricants , cotton wastes , pencil , paper, etc.

CHEMICALS

• Material (Substances) in the form of powder, liquid, tablets, etc that undergo certain process according to certain formula.

• Needs to be stored , preserved , issued very cautiously since they involve risks.

• Ex: acids.

INFLAMMABLES

• Materials which are highly susceptible to fire.

• Should be stored farther from the main store with complete fire-fighting equipment.

• Ex: petrol , kerosene , paints, etc.

FURNITURE

• Movable items.

• Usually bulky.

• Large storage space.

• Requires maintenance, repairs & replacements.

• Ex: tables , chairs, almirahs, stools etc.

PERISHABLE MATERIAL

• Short lived and decay easily.

• Need to be stored at temperature controlled rooms to prolong their life.

• Ex: Milk , vegetables , eggs , medicines, etc.

• Ex: Some chemicals and rubber parts, etc.

PACKAGING

• Wrapping – paper , straw , saw dust, etc.

• Protective covering – wax , grease, etc.

• Containers – boxes , glasswares ( jars, bottles ), metal containers ( cans, barrels ).

• Storage of packaging material needs space as they are bulky.

EMPTIES

• Used packages which are scrapped after use.

• Some empties are recycled or reused.

• Others are stored in heap in stockyard for its disposal or to be burned.

• Ex: wooden cases , metal containers , glasswares, etc.

SUPPLIES• Materials used up in running the plant or

in making the products but are not part of any product.

• Miscellaneous – brooms, cotton waste, toilet paper, cleaning powder, etc.

• Welding , soldering & tinning material – electrodes ,gas , welding rods, solders, etc.

• Abrasive material – sand paper, etc.

• Oils and greases.

• Office supplies , Electric supplies & Printed forms.

CLASSIFICATION ON THE BASIS OF USABILITY OF MATERIALS

1. Serviceable and Unserviceable Materials

2. Semi-Finished and Finished Materials

3. Dead Stock Items

4. Obsolete Items

SERVICEABLE & UNSERVICEABLE

SERVICEABLE ITEMS

• Materials temporarily out of order and can be put to use after repairs.

• Ex : Chucks , fixtures, hacksaw blades needing grinding, etc.

UNSERVICEABLE ITEMS

• Materials that are gone out of order permanently.

• Ex : Wornout tools , steel chips from machines , ash from boilers, etc.

SEMI-FINISHED & FINISHED

SEMI-FINISHED ITEMS

• Partially processed.

• Supplied parts.

• Ex : Preformed Plastic Bottle Tube.

FINISHED ITEMS

• Fully processed products.

• Ex : Plastic Bottle.

DEAD STOCK ITEMS

• Equipments that have definite life & cannot be written off before expiry date of their life.

• Ex : office equipment , material handling equipment, tools , measuring instruments, etc.

OBSOLETE ITEMS

• Items that went out of date because of new invention etc and are no longer profitable.

INVENTORIES CLASSIFICATION

1. Production Inventories

2. MRO Inventories

3. In-process Inventories

4. Goods-In-Transit

PRODUCTION INVENTORIES

• Standard Industrial Items purchased fro outside (broughtouts).

• Non Standard Items (Purchase items).

• Special items manufactured in the factory itself (Works made parts/piece parts).

MRO INVENTORIES

• Maintenance, repairs and operations supplies.

• Consumed during process of manufacturing but do not becoming part of the product.

IN-PROCESS INVENTORIES

• Items in semi-finished conditions.

GOODS – IN – TRANSIT

• Materials which have been paid for but not received by the stores.

CODIFICATION

CODIFICATION

• Codification in an industry is the systematic concise representation of equipment, raw materials, tool, spares, supplies, etc, in an abbreviated form employing alphabets, numerals, colors, symbols, etc.

• Example: - Client Code, Policy Number, PAN, UID Number, Bank Account Number, Vehicle Number, Telephone Number, Pin code, Examination Seat Number, Student Reference Number, etc

BENEFITS OF CODIFICATION

• Accurate and logical identification• Avoidance of long and unwieldy

description• Prevention of duplication • Product simplification (Variety Reduction)• Efficient purchasing• Minimization of clerical work• Efficient storekeeping• Accurate and reliable recording and

accounting• Easier computerization• Others

STAGES OF SCIENTIFIC CODIFICATION

1. Identification

2. Classification

3. Codification

IDENTIFICATION

• Assigning nomenclature

• Specifications & technical name

• Ex : A 20 Ø drill : Drill, HSS, Taper shank, 20 Ø × Std.length

CLASSIFICATION

• Arrangements of items into groups according to pre-determined patterns

• Grouping of items are done on the basis of Description , As per supplier , As per origin , Value and Function of the item.

CODIFICATION• Allocation of specific codes to the items within the

broad framework of the selected system.

• Codes should have following characteristics :

1. Simplicity

2. Brevity

3. Flexibility

4. Uniqueness

5. Coding symbols

6. Layout of the code

7. Self decoding

8. Consistency

9. Convenient for accounting

BASIC SYSTEMS OF CODIFICATION

• Alphabetical System

• Numerical System

• Alpha-Numerical System

FUNDAMENTAL SYSTEMS OF CODIFICATION

1. The Brisch System

2. The Kodak System

BRISCH SYSTEM• Established by Mr. E. G. Brisch jointly by Mr. J. Gombinski

• A 10 digit typical class breakdown is given :

1. Primary material

2. Bought out commodities

3. Components

4. Sub-assembly

5. Tools and portable equipments

6. Plant and machinery

7. Building services and utilities

8. Scrap and waste

9. Reserved

KODAK SYSTEM• Originated by Eastman Kodak Company of Newyork, U.S.A

• Based on numerical system of codification

• It employs 10-digit numerical code

• Composition of code is in three groups separated by hyphen

• First two digits – source of purchase

COLOR CODING

1. Color code for identification of pipelines

2. Color code for raw materials

3. Color code for lubricants

THANK YOU