INVENTORY CONTROL

Stage of conversion Raw Materials WIP Components Own made, sub-contracted Sub-assemblies Assembly, Testing, Finishing

CLASSIFICATION Nature of Inventory Direct Materials Goes into the product

Bought Out Standard, specials

Indirect Materials Participates in conversion but does not go into the product
Usability Serviceable, Semi-finished, Dead Stock Unserviceable Finished Obsolete

Finished Goods

INVENTORY CONTROL PURPOSE

CODIFICATION

System for easy identification, record and control of the items using numerals, colours, symbols etc. Avoid lengthy description Avoid subjective understanding & perception Precise & logical identification Ease of computerisation Common linking factor for data, system, transactions, costs, valuation, description specs, usage and documentation Basis for BOM Help operational efficiency in all areas Helps documentation

INVENTORY CONTROL
STEPS
IDENTIFY Describe (necessary & sufficient) in logical sequence Name, distinctive feature, specification, dimension e.g. 20 f SS bar to be identified as SS round bright bar AISI 316 f 20

CODIFICATION

CLASSIFY - As per common features Description, nature, source, usage Bars, castings, ferrous, RM, components etc CODIFY- Brief, generic, simple, flexible, appropriate, unambiguous, self explanatory, convenient consistent & easy to understand.

CODIFICATION SYSTEMS

COLOUR CODING Visual, Lasting, Easy to understand e.g. As per BIS colour coding for pipelines Contents
Cooling water Drinking water Hot water Compressed air Acids

Ground colour sea green sea green sea green sky blue Dark violet

first Second band band French blue French blue signal red Dark violet -

INVENTORY CONTROL
ALPHABETICAL Easy to formulate & understand Use alphabets as less as possible for category and description Keep uniformity in use of alphas Category Oil Paint Alpha O P Sub cat Lubricant Fuel Thinner Primer Paint Alpha L F TR PR PT Code OL OF PTR PPR PPT

CODIFICATION SYSTEMS

NUMERICAL

Sequential Number of digits decided on basis of requirement AND provision for expansion. Few numbers or a couple of digits are reserved
ITEM Base Case Cover Manifold CODE 10001 10002 10003 10004 ITEM Crank shaft Con rod Cap Con bolt CODE 10010 10011 10012 10013

Simple and good for small firms with few items Does not form item groups

INVENTORY CONTROL

CODIFICATION SYSTEMS
BLOCK CODE A block of 100 or 1000 numbers are allotted for each category Sr. numbers are allotted within the block Castings 1001 t0 1999 Forgings CODE 1001 1002 1003 1004 2001 to 2999 ITEM Crank shaft Con rod Cap Con bolt CODE 2001 2002 2003 2004

DECIMAL CODE
System has fixed # of digits Initial digits are allotted category-wise / product-wise Then further digits allotted sub-category wise Further digits are kept for item categories / size

ITEM Base Case Cover Manifold

Items are grouped category-wise automatically Suitable for medium and small cos

Main Category
Structural 10

Sub Cat
angle 02

Item Cat
Equal 01 Unequal 02

Particulars Full code (Vocabulary)

40x40x6 50X50X6 60x40x4 80x50x6 10.02.01.40 10.02.01.50 10.02.02.60 10.02.02.80

Suitable for large multi-product companies

INVENTORY CONTROL

CODIFICATION SYSTEMS

ALFA-NUMERICAL Alphabets are used for main category and Numeric are used for subcategories Items Main cat Sub cat 101 102 103 PK 401 402 501 502 PK401 PK402 PK501 PK502 Vocabulary PT101 PT102 PT103

Painting mat. Thinner Primer Turpentine

Packing mat. Planks 2 4 Nails 1 2

PT

Useful large companies having large numbers of material types

INVENTORY CONTROL

STANDARDISATION

Process of establishing agreement on acceptable levels of characteristics based on studies, experience and recommendations of statutory bodies and govt.This agreement is a Standard e.g. IS 13099:1991 Geometrical tolerances IS 12718:1989 Performance requirements of garment leather IS 1991(Part II):1987 Safety requirements for abrasive wheels ISO 9000:2000 Quality Systems Levels Individual for own use by a firm or individual Industry for use of a particular industry like drilling equipment National for use nation-wide and may be mandatory JIS, DIN, ASTM, IS, BS etc. International Internationally applicable (ISO) like ISO9000:2000 Advantages Clarity between buyer & supplier Common yardstick for comparison Ease to locate alternative suppliers Reduces quality costs Easy availability in the market Ensures interchangeability Reduces varieties

Inventory Control

Standardisation & Variety Reduction

1) Frequency & quantity analysis Standardize on high quantity and high frequency items compare with standards and adopt the std size. Try to adopt these std items in place of low frequency items directly or by modifying design
2) Preferred Nos e.g. Wattage of bulbs, HP of motors, Sizes of readymades Methods Series, arithmetic, geometrical, tables of pref. Nos Let Then r = a) = smallest size, b) = largest size n = # of varieties = r) = ratio of each size to previous size. b a 20 1 1 n-1 1 5-1 = 2. 114

Role of Materials mgt. Forming Item code master (addition only by authorised persons) Modifying item code master to eliminate obsolete items Ordering other than coded item only by special sanction Periodical review of non-standard items, costs and possibility of conversion to standard (Consider availability of nearest std. items) Aiming at computerisation

5 calculated sizes Practical preferred sizes a (1) 1 ar (1x2.144) = 2.144 2 ar2 (2.144x2.144) = 4.469 4 or 5 ar3 (2.144x4.469) = 9.4475 10 Ar4 (2.144x9.4475) = 20 20