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Inventory control & Cost Reduction techniques is an important part of materials management which helps to reduce 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.

Standardization

Also called Industrial Standardisation

This is a process of establishing 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 as 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 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 practicesMethods of tests: give details of testsGlossaries: 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 nad 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
DIN German Standards
GOST USSR Standards
ISO International Organization for Standardization
JIS  Japanese Standards
SAE Society for Automobile Engineers
UNI Italian Standards

Activities involved in Indian Standards

1 Establishing 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 following Advantages or benefits.

1 Clarity
2 Eliminate unnecessary things
3 Reduces unnecessary Varieties
4 Accurate comparison of Quotations
5 Procurement from more than one manufacturers or suppliers
6 Inter changeability of parts
7 Routinizes purchase efforts
8 Reduces inspection and quality costs
9 Reduces Material Handling costs
10 Reduces procurement lead time
11 Basis for further inventory analysis
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