Inventory control & Cost Reduction techniques is an important part of materials management which helps to reduce the overall cost of Inventory control by applying various basic as well as innovative techniques such as Inventory turnover ratio, Standardization and codification, Value Engineering and Value Analysis.
Also called Industrial Standardisation
This is a process of establishing an agreement upon acceptable levels of various characteristics on the basis of specific studies, experience, recommendations of the statutory bodies or the governments.
e.g. of characteristics: Dimensions, Physical characteristics, chemical composition, performance etc.
The established agreement or uniform identification is called a standard or specification
Standard and Specification are the two different things. This difference mainly depends on the intention of use.
Specification: is intended for recurrent use
Standard: Every standard is a specification but every specification is not a standard.
Factors or Aspects to consider for standards
|Dimensions||To ensure interchangeability and to reduce the variety||IS 13099, IS 13902 (Part I) 1993, IS 5387|
|Performance Requirements||IS 12718 – 1989, IS 12835 – 1991|
|Design Requirements||IS 16533 (Part I) 1989, IS 12835 (Part I) 1989|
|Safety Requirements||IS 1991 (Part 1) 1987, IS 5571 – 1979|
|Codes of practice, methods of test and glossaries||Codes of Tests: guidance on best-accepted practices methods of tests: give details of tests Glossaries: provide standard definitions of terms, conventions, units and symbols used for technical communications|
Levels of Standards
|1||Individual standards||standards laid down by an individual user, a department or a firm||Preferences of Executive|
|2||Industry Standards||prepared by a group of related interests in a given industry, trade or profession or statutory bodies & authorities by Govt.||SMMT (Society of Motor Manufacturer and Traders), Textile Commissioner, Agmark, etc.|
|3||National Standards||at the national level by consulting manufacturers, scientists, users and government departments,||ISI (Indian Standard Institution), BIS (Bureau of Indian Standards), The National Physical Laboratory, Departments of Weights and Measures|
|4||International Standards||by International bodies||ISO (International Organization for Standardisation), Organization for Legal Metrology, World Gold Council|
Some Foreign Standards in Use in India
|API||American Petroleum Institute|
|ASA||American standard association|
|ASTM||American Society of Testing Materials|
|BSS||British Standard Specification|
|ISO||International Organization for Standardization|
|SAE||Society for Automobile Engineers|
Activities involved in Indian Standards
|1||Establishing the need for the standard|
|2||Scrutiny of the request by the divisional council|
|3||Preparation of draft standards|
|4||Publication of the standard|
Advantages of Standardization
Standardization offers the following Advantages or benefits.
|2||Eliminate unnecessary things|
|3||Reduces unnecessary Varieties|
|4||An accurate comparison of Quotations|
|5||Procurement from more than one manufacturers or suppliers|
|6||Interchangeability of parts|
|7||Routinizes purchase efforts|
|8||Reduces inspection and quality costs|
|9||Reduces Material Handling costs|
|10||Reduces procurement lead time|
|11||The basis for further inventory analysis|
This is all about Inventory Control & Cost Reduction Techniques.
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