Material Specification, Codification, and Standardization

Abstract

This chapter addresses a very important strategic intervention required in organizations to reduce inventory and related costs through codification, standardization, simplification, and variety reduction. Codification should become a starting point of this initiative. A material identification code uniquely encapsulates relevant key information about a particular item in 7–10 digits using numerals or alphanumeric codes. Codification may reveal excess variety and will facilitate interdepartmental communication and will lead to standardization. Simplification and variety reduction are direct derivatives of codification and standardization. Huge amount of inventories can be saved through product simplification and variety reduction. In case 100 different parts can be standardized into 1, then only 10 % inventory is required. Even modest goal of reducing variety from 2 to 1 can cut down inventory (and cost) by 30 %.

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