Chapter 10. Codification, Standardization and Variety Reduction

Transcription

1 Chapter 10 Codification, Standardization and Variety Reduction

2 Classification The materials procured by a firm must be classified and coded before the materials are inspected, accounted in stores ledgers and binned and hence materials are broadly classified according to their nature, use and service before the job codification is taken up.

3 Codification This is the system adopted for accurate identification of materials by allotting a numerical number for each item procured and stored.

4 Advantages of Classification and Codification Systematic grouping for correct identification of similar items. Avoids duplicate stocks of same items Reduction in sizes and varieties Helps in standardization of materials Ensures accuracy in correspondence, records and postings of receipts and issues in appropriate records

5 Principles of Classification and Codification Consistency Comprehensiveness Mutual exclusiveness Simple Easily adoptable

6 Groups of Materials Classification Raw Materials Components Consumables Spare Parts Supplies Tools Packing Materials Work-in-progress items Finished Goods

7 Completely knocked down items Hard ware items Fasteners Subcontracted items Wires and cables Paints and chemicals

8 Systems of codification Alphabetic system Simple numeric system Alpha-Numeric System Block System Decimal System Numeric System Mnemonic System

9 Objectives of Codification To bring all similar items together under one classification or group To classify an item according to its nature or characteristics To avoid duplication and confusion To fix essential parameters to specify an item

10 Steps involved in Codification System The large number of items of different varieties comprising the inventory needs to be classified under major groups known as Generic Groups Further divide into distinct subgroups according to the type of material Further listed in alphabetical order and then according to the size.

11 Codification Systems The Kodak System The British System

12 Standardization It is the process of establishing basic specifications for a set of commonly used characteristics of size, shape and performance for products.

13 Simplification It is closely related concept or process which refers to the reduction in the number of different sizes and shapes of items produced or stocked.

14 Two Areas of Standardization Industrial Standardization Managerial Standardization

15 How Standardization Reduces Costs? It enables a firm to purchase fewer items, in large quantities and at lower prices Due to fewer items are processed and stocked reduces purchasing, receiving, inspection and payment costs Inventory control becomes easier and less costly because of stocking of fewer items

16 Objectives of Standardization To achieve maximum overall economy To ensure maximum convenience in use To ensure uniformity and reduction in variety To help in quality assurance by improving quality in every activity

17 Levels of Standards Individual Standard Company Standard Industry Standard National Standard International Standard

18 Advantages of Standardization Fewer parts to deal with inventory and in manufacturing Simpler and more routine purchasing, handling and inspection procedures Facilitates longer production runs and automation Helps in better understanding of customer requirements

19 Disadvantages of Standardization Decreased variety of end products results in less consumer appeal and thereby affecting the competitive advantage for the firm. Designs may be frozen with too many imperfections remaining Design changes involve high costs which will increase resistance to improvements in design

20 Objectives of Standardization Program To standardize the materials used in firm To bring the company standards in line with the industry standards To reduce the varieties of raw materials and components used To establish the specifications of materials to be purchased

21 Types of Standards Product Standards Engineering Standards Material Standards Quality Standards Process Standards Equipment Standards Safety Standards Administrative Standards

22 Simplification It is defined as the elimination of superfluous varieties, sizes, dimensions, features etc., making the design, assembly or product simpler, less complex and less difficult to use.

23 Specification A Specification is a detailed description of a material, component part or a product, including physical measures such as dimensions, volume, weight, surface finish etc.

24 Specification Types Dimensional and Material Specifications Performance Specifications

25 Kinds and Sources of Industrial Standards International Standards Industry or National Standards Company Standards

26 Variety Reduction The process of standardization logically leads to simplification and variety reduction. Variety reduction defined as a form of standardization consisting of the reduction of the number of types of products, or materials or parts within a definite range to a lesser number which is adequate to meet prevailing needs at a given time.

27 How to control Variety? By Simplifications By Standardization By Specialization

28 Value Analysis This is another approach to variety control and thereby cost reduction

29 Benefits of Variety Control Better after sales service Greater technical productivity Better understanding of technical problems Lesser set up times Higher equipment utilization

30 Reduction in inventory Higher equipment utilization Easier inventory control Better use of storage space Quicker stock-checking Reduction in purchasing effort