This project is presented by the members of Group No.

– 6:

Name Roll no. Signature

1. Chauhan 09
Maheshwari
2. Gupta 19
Vineetkumar
3. Mody Hardik 27
4. Parikh Sumit 29
5. Shah Ankit 39
6. Shah Neha 41
7. Subramany 49
Shruti
8. Waghela 59
Manoj

Prof. Signature

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 Mr. Avadesh Yadav

What do we mean by Material Management?

Material is the central item and the activity of any organisation. Organisation
exists for material, works for material. The main purpose of any organisation
is to make profit. This profit or loss gets generated due to material.

Preliminary Organisation:

Every organisation deals with material whatever may be the business. In a

simple preliminary trading organisation the involvement of material is
maximum. It is basically buying and selling material. In such organisation
effective material management involves maximising materials productivity.
This requires well – coordinated and integrated approach towards various
problems involving decision making with respect to materials.

Materials management is a basic part of any organisation, which produces a

product or service of economic value. In manufacturing organisation the
material is brought and processed in the organisation. That is called as
“value addition”. This addition “work” makes the organisation larger.

Material management has to exist in every organisation. Since last many

years the separate materials management departments have become a need.
It is the point to note that each company focuses its major emphasis on a
segment of the materials management. Purchasing production and inventory
control, stores, warehouses, etc. are the major areas.

In any organisation, the material department plays an important role of

dealing with material. Material means money. More than 60% of the money
of the company is handled by the material department itself. The objective of
the materials management is to buy materials and services of the right
quality, in the right quantity, at the right place, from the right price, from the

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right source, and at the right time. To purchase wisely involves a constant
search for better values that yield the best combination of price, quality and
service.

CODIFICATION

Nature of codification

Any organization stores a large number of items, often running into

lakhs. There should, therefore be, some means of identifying them. A
common practice is to describe them by individual names. Since several
department us the same item, they call the same item by different names and
store them in different places. One store-keeper may classify an item as Sal
Ammoniac, whereas a research chemist might identify it by the name of
Ammonium Chloride, only to be told that it is not available. A classic
example comes from U.K.: An electrical firm found that a simple item of
screw with the width of 3/8” and length of 6” had as many as 118 names
depending on the type of usage and the department using that screw. A few
names were plunger, dowel pin, roller, locating peg, drive pin, pinion
spindle, pin mould holding, motor drive spindle, trip arm pin, armature stud,
etc. A proper codification removed the 117 stacking points with it the
associated inventories, entries, obsolete item, etc.

EXAMPLE OF CODIFICATION

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Process of Codification

Codification is the process of representing each item by a number, the

digits of which indicate the group, the sub-group, the type and the dimension
of the item. Many organisation in the public and private sector, railways and
DGS & D, have their own system of codification, varying from eight to
thirteen digits. The first two digits normally represent the major groups, such
as raw materials, spare parts, sub-contracted items, hardware items, packing
material, tools, oil, stationery, etc. the next two digits indicate the sub-group
such as ferrous, non-ferrous, etc. Dimensional characteristics of length,
width, head diameter usually constitute the further three digits and the last
digit is reserved for minor variations.

The codification process could be obtained by the nature of items in

grouping all items of the same metal content, say ferrous, non-ferrous, etc.
The system of codification could be built by the end use of the item, that is,
items grouped according to maintenance, spinning, weaving, packing,
foundry, machine shop, etc. The codification could be thought of on the
basis of source of purchasing where items obtained from one source of
purchasing are grouped together and given codes. The codification could
also be built on the basis of alphabetical listing.

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 It can also be done by numerical digits or by a combination of English
letters and numerical. The universal decimal classification of codification,
which is used in libraries, introduces decimals for identifying items.

Whatever may be the basis, each code should uniquely represent one
item. It should be simple and capable for being understood by all.
Codification should be compact, concise, consistent and flexible enough to
accommodate new items. As far as possible uniform dimension, say the
metric system should be adopted. It should be meaningful and oriented
towards the needs of an individual organisation. The grouping should be
logical, holding similar parts near to one another. Each digit must be
significant enough to represent some characteristic or aspect of the item.
Two fundamental systems are described in detail in the following
paragraphs.

KODAK SYSTEM

The Kodak system has been developed by Eastman Kodak Company of New
York which consists of 10digits of numerical code. The logic of major
grouping is based on sources of supply. All materials are divided into 100
basic classifications contributed only by procurement consideration. For
instance a bolt is listed as hardware catalogues and available with hardware
suppliers. If this bolt however is available only as a party of the machine it
will be available under maintenance. Each class is divided into 10 sub
classes. For example if class 20 represents cutting tools then 200 represents
drills reamer, counter, bars, etc.

BRISCH SYSTEM

The brisch system is named after a prominent consulting engineer in the UK

consist ok 7 digits and is applied in the three phases. The items are grouped
into suitable preliminary categories, such as assemblies, sub assemblies,
component of the self items. After these preliminary categories, items are

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grouped within the respective clams in order to bring similar items together.
The Brisch system though it consist only of seven digits it is quite
comprehensive as the basis is on the logical major grouping.

ADVANTAGES OF CODIFICATION

As a result of rationalized codification, many firms have reduced the no of

items. It enables systematic grouping of similar items and avoids confusion
caused by long description of the items since standardization of names is
achived through codification it serves as the starting point of
simplification and standardization. It helps in avoiding duplication of items
and results in the minimization of the no of items, leading to accurate
records. Codification enables easy recognition of an item in stores, thereby
reducing clerical efforts to the minimum. If items are coded according to the
sources it is possible to bulk the items while ordering. To maximize the
aforesaid advantage, it is necessary to develop the codes with all concerned,
namely, personnel from design, production, engineering, inspection,
maintenance and materials.

NEED FOR CODIFICATION

Standardization is required not only for ensuring procurement of the right

quality of incoming material, but also for cost reduction. It will be
remembered that considerable publicity was given to the large-scale cost
reduction in materials cost through standardization by the US defenses
services under the guidance of the then defense secretary, Robert s.
McNamara.

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 STANDARDISATION

STANDARDISATION IN INDIA

Effective steps have been taken in a number of organizations in India for

cost reduction in the number of stores items. The aim of standardization
should be to have uniform standards for similar items, and the standards
evolved should take cognizance of the indigenous availability of materials to
the maximum extent possible. Realizing this importance, the Indian
standards institution (ISI) has promoted over 7,000 standards covering raw
materials, components and finished products. These are widely published
and are readily available from the Indian standards institution.

IMPORTANCE OF STANDARDISATION

Standardization enables the materials manager to achieve overall economy

and ensures inter-changeability of parts. Since more than one manufacturer
can supply standard items, it will imply better price and better delivery.
Standardization also implies reutilizing purchase efforts, less stock and
hence less obsolete items. It also means IRSS inspection efforts; as a matter
of fact, many organization do not check routine items bearing the ISI mark

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in a detailed manner and resort to inspection of only a small fraction items. It
is also possible to enter into a rate/running contract with standard items.
While dealing with variety reduction and standardization, the committee on
public undertakings*mentions the following:
“Another reason for large inventories in public undertakings was that the
items of stores were of multidinous variety. Thus in oil and natural gas
commission it was found that in the same project different makes of
machines were bring used for identical purpose. This was true not only of
imported machinery and equipment but also of indigenous makes. For
instance, in the case of 3 ton trucks, Bedfords, Fargos and TMBs were all in
use, simultaneously in most of the projects. The result was that each major
project had to stock about 3,000 to 4,000 categories of spare parts pertaining
to motor vehicles alone.
“Similarly in Hindustan insecticides it was noted that at the end of 1964-65
there were many varieties for certain items of stares, e.g., valves-
150varieties, ms bolts and nuts-44 varities, drills H.S.(S.S. & T.S.) -3
varities, etc.

DEFINITION

A standard is defined as a model or general agreement of a rule established

by authority, consensus, or custom, created and used by various levels of
interest. For instance, an individual may be he starting point of using the
standard and then his department will use the same standard to suit its needs.
The firm may similarly prepare, by consulting different departments, a
standard for guiding the activities. Related industries in the industry group
may also prepare industrial standards. At the national level, by consulting
manufacturers, scientists, users and government departments, national
standards are evolved. Such national standards are presented and discussed
to form international standards. The standards could cover a variety of
industries, such as engineering, textile, chemical, pharmaceutical,
agricultural as also education. The topics covered under standards can
include purchase contracts, forms, sampling, testing, safety measures, etc.
Thus, standardization can be convinced on a three- dimensional plane of
levels, industries and topics.

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SIMPLIFICATION

The process of standardization logically leads to simplification or variety

reduction. This implies reducing unnecessary varities and standardizing to
the most economical sizes, grades, shapes, colours, types of parts and so on.
In large organizations handling 50,000 items, there are several items under
stock having very little variation in quality, dimension or functional
effectiveness. Nevertheless these continue to be in stock for historical
reasons. Practical experience indicates that often his plethora of variety is
not even perceptible.
These items can be analyzed their frequency of usage or movement analysis
over the last few years. Frequency or movement analysis would bring items
which are seldom used or not used at all. On the basis of this analysis, a
company could set standards to replace these items. The setting up of a
standard depends on the effect the dimension variation has on the
performance of the product. To illustrate let us take a look at the frequency
figures bellow. It is evident that for the sane variation from the optimum size
B, the performance of the product in exhibit 7.2 is less affected than in
exhibit 7.3. Therefore, for items which affect the product performances as in
exhibit a great deal of flexibility is introduced in fixing up standards with a
firmer quality control where the standards are near A or C for an item.

EXAMPLE OF STANDARISATION

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A TO Z BENEFITS OF STANDARDISATION

The warehousing and inventory manager must have an unambiguous

nomenclature identifying the items, in order to serve the customer promptly.

(a) In this process, Standardization reduces the time involved in

negotiation process with the suppliers communication is better
with prompt delivery schedule.
(b) More than any other executive, the stores - in charge comes into direct
contact with a variety of materials. He can gain knowledge on the uses of the
material in

The store and can contribute significantly to achieve standardization.

(c) Standardization enables one to concentrate on large quantity of fewer

items.

(d) It is possible to place economic order quantity or orders of staggered

deliveries with bulk discounts.

(e) Economic lot size at manufacturing will not be a problem as item can
be manufactured with the same set up timings for standard items.

(f) Since the inventory is likely to be less, the working capital

commitment

Of the organization will also be less.

(g) The items can be easily identified by all persons in stores as the bin
location can also be standardized.

(h) Standardization reduces the time involved in negotiation process with

the suppliers as the communication is better with prompt delivery schedules.

(i) The procurement lead time gets reduced as everyone knows the item
clearly.

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(j) The buyer-seller relations can be improved as all dimensions including
price analysis, specification lead time etc., are standardized without scope
for disputes.

(k) Standardization promotes healthy competition amongst vendors as

standard items can be brought by several companies.

(l) Standardization minimizes obsolescence.

(m) It is possible to have rate/running contracts for standard items.

COST REDUCTION
(n) Standardization reduces design time by concentrating on fewer parts.

(o) It minimizes drafting time through repetitive use of standard drawings.

(p) It expands the engineers list of known and proven items.

(q) It reduces specification writing by repetitive use of standard

specifications.

(r) Interchangeability of parts is assured through standardization.

(s) Lower cost of production through continuous manufacturing run with

less material handling problems and increased capacity utilization is
achieved by standardisation.

(t) The workers at all levels and departments become more efficient by
repeated handling of items and it is possible to utilize less skilled workers
for standard operations.

(u) Standardization enables reduced inspection and quality control burden.

(v) Since methods are standardized, it ensures safety to all.

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(w) Standardization directly reduces the variety and improves the
information system of the warehouse manager.

(x) Standardization enables reduced number of maintenance tools and

improves the maintenance practices.

(y) Standardization aims at maximum variety of finished products with

minimum categories of assemblies, subassemblies and components.

(z) In general, standardization results in simple operation, minimum paper

work, improved inter departmental coordination, ease of computer
application and pinpoints area involving inefficiency. In short,
standardization is a means to faster and better understood communication,
with fewer mistakes and hence smoother life.

Standardization and simplification

A standard is defined as a model or a general agreement or a rule established
by Authority, consensus, or custom, created and used by various levels of
interest. Standardization is a systematic and order formulation, adoption,
application and review of industrial standards which leads to simplification
or variety reduction. This implies reducing unnecessary varieties and
standardising to the most economical sizes, shapes, grades, colours or types
of parts. The word “standard” is multi-valued as it may mean a physical
standard, prototype of mass or a technical document. Industrial standard is
generally accepted statement of the requirement.

Standardization eliminates the rule of thumb method as the width of

the thumb varies widely from one individual to another. When Noah built
the Ark, measurements were made in cubits, cubit being the length of man’s
forearm. Thus, if Noah had been a smaller person or a hulking giant of a
man, the size of the Ark of 300 cubits could have varied considerably.

In this context, simplification is a process of reducing the variety of

items. It reduces the number of types and sizes of items to a minimum,
consistent with the need of an organization. Simplification in company
operation is an essential process of standardization.

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 Specification is defined as concise statement of requirement to be
satisfied by a product, a material or a process indicating the procedure by
means of which it may be determined whether the given requirements are
satisfied. Speciation changes according to the purpose of the use of material.
Thus, aluminium used for cooking utensils should be at least 99% pure,
where 95% may be sufficient for an electric conductor. An important factor
is to avoid both over specification and under specification as both these
strategies will lead to increased cost. Over specification increases the costs
due to the extra effort needed to reach higher standards.

Standardization is a process of formulating and applying rules for a

beneficial and orderly approach to a specific activity. It based on
consolidated efforts of science, technology and experience, reflecting in:

(a) Units of measurement,

(b) Terminology,

(c) Products,

(d) Process and

(e) Safety of persons,

Procedure of standardization
The task force, responsible for standardization must follow a
procedure to get the items standardized. They should get all relevant facts
from the concerned executive. They should develop standards which are
easy to understand and to implement. There should be a constant reviewing,
updating and monitoring committee so that best benefits accrue to the
company.

The process of standardization can be conceived on a three

dimensional plane, to include factors such as levels, aspects, subjects and
there interrelations. The level includes individual, department, company,
industry, nation, international, universe, while the aspects may include
forms, ethics, code of conduct proc5edures, contracts, inspection, testing
sampling, agreements or reporting, notes, etc. The third dimension, namely

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the subject, encompasses industry, education, communication, agriculture,
transport, mining trade, commerce, energy, family planning, construction
and administration.

The standardization process may take the form of a document

containing a set of conditions to be fulfilled, a fundamental unit or physical
constants or an object for physical comparison. The apex body of standards
in India is the Bureau of Indian Standards, formally known as Indian
Standards Institution (ISI). It has formulated 15000 standards, after
consulting the involved people. At the international level, International
Standard Organisation is based in Geneva.

Items to be standardized
The warehouse and inventory manager should involve executive from
design, maintenance, inspection, operation and costing department in order
to ensure that the recommended standards are implemented. This team
should update its knowledge on the latest available technological
developments to effectively implement the process of standardization. If the
standard is approved as a company standard, the department should make
necessary reproductions and distribute copies as mandatory to all concerned.

We have the kilogram as a standard of weight, metre as standard of

length. Keeping to the left of standard of the road, motors are made only in
certain ratings, bulbs only in specific voltages, etc. Procedures, formats,
reporting systems, sampling inspections plans, letter heads, operating
manuals, standard costing methods, etc. are the examples one comes across
in the field of standardization. It is easy to standardize items for which
published standards by The Indian Standards Institution are available. It is
advantageous to tackle non - critical high value, easily available items for
standardization, as otherwise there will be opposition from design
departments. MRO- Maintenance, Repair and Operation-items like fasteners,
hardware items, maintenance, etc. are a good starting point to impose
standardization.

METHODS OF STANDARDISATION

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Whenever published standards are available from outside source like Indian
Standard Institution, the same can be applied. The frequency distribution of
demands of each type and size of an items in terms of quantity of materials
purchased/used/or products sold, would be an excellent starting point for
standardization and variety reduction in an organization. For instance,
consider an example where the diameters in multimeters of pipes are 5.0,
5.1, 5.2, 5.3, 5.4, and the fast pattern shows that only two sizes 5.1 and 5.2
are often used. Then the orders for remaining three dimensions can be
gradually discontinued if these items are not critical from performance and
safety angles.

The preferred number series- a series of standard sizes in suitable

steps used in bulbs and currency- developed by Renaud and known as R-5,
R-10, R-29, R-40, etc. is another way of starting the standardization process.
The values of the series are available in the Indian Standards 1076 published
by the Indian Standard Institution.

ROAD BLOCKS
Standardization should not lead to monotony and prohibit innovation. For
instances, it is not possible to introduce standardization of the end product in
job shop, but assemblies/parts constituting the final product may be
standardized. Similarly, it is possible to standardize items like shoes in terms
of seven or eight sizes. Standardization must not lead to rigidity in design or
restrict technical development. Standardization is also based on previous
practices. For instance, Russians specify motors by weight and not by horse
power. Indians usually measure weight in kilograms but height in British
units as six feet and not centimeters. These practical approaches have to be
borne in mind while standardization process is developed as it should not
make life complex.

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 BIBLIOGRAPHY

1) www.google.com
2) Material Management – S.D.Aphale.

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