14 Advantages of Store Management and Codification are explained below:
1. Rational codification is of utmost importance in order to locate incoming and outgoing materials quickly and accurately, to provide necessary information concerning the exact whereabouts of the materials and to supply correct and timely data to the concerned departments. It is, therefore, clearly desirable that the goods in the store house should be arranged in the sequence of the stores’ coding system, as far as practicable.
image source: i.ytimg.com
ADVERTISEMENTS:
2. By codification long description of materials is avoided. Names of materials are simplified by choosing symbols which are simple, clear and free from duplication. Moreover, by it secrecy can be maintained which is the essential part for the smooth functioning of the business.
3. Coding system also simplifies mechanical recording as limitations of machines, prohibit the use of long descriptions because of the time it would take to record or the mechanical complications involved. The Kardex or Visidex system or mechanized purchased card system or electronic computer can be operated only after the store items are suitably codified.
4. A large number of store items are reduced to smaller group of items in a systematic way which helps in standardization of materials and encourage various uses of the same item.
5. Because of codification, receipt notes, issue notes, stock taking sheets and in-fact, all basic stored departments, can be stored into code number order posted easily to stock records which are arranged in the same order.
ADVERTISEMENTS:
6. The proper maintenance of the stores also depends, more or less, upon the rational codification of stores. To keep the stores in desired condition over a period of time, may require very simple or elaborate measures, depending on the nature of materials, the length of time in storage and the rate of deterioration.
The codification is one of such measures because durable, perishable, costly, cheap, heavy, light, frequently used goods etc. are segregated into different rational groups and taken care of by proper storage devices accordingly.
7. The central stock records can be kept in stores-code order showing how much is in stock and what the movement is for each stock holding point separately with a total for the organisation as a whole. This helps in buying and transferring of stock from one unit to another as and when necessary.
8. By codification, the accounting work of the various items becomes easier. Moreover, by it the possibility of errors and frauds is minimized which helps in increasing the efficiency of the concern.
ADVERTISEMENTS:
9. The code number provides the reliable index for all items in the price lists. This feature of coding is emphasized by the use of lists of maker’s parts by purchasing department-
Particularly in the case of production materials, the code numbers can be arranged so as to correspond with cost headings, thus simplifying material costing.
10. Since every different type of item has different code because code numbers are given after seeing the quality, size, form of the item. So, it is helpful in identifying each and every item accurately. This code system distinct the two items separately through the items of similar names.
11. Codification enables the organisation to convey buying instructions easily and quickly and divide the purchasing department into commodity sections each engaged in the buying of a particular range of stores.
This is especially helpful where there is a central purchasing for different units widely dispersed. Thus, it also helps in getting bulk discounts.
12. Since similar items are grouped together, an item coded once cannot be given another code. Thus, the particular item can be easily located. So, it helps in removing duplication. If in any concern, coding system is not adopted naturally, there will be the problem of locating the items whenever, they are required by the concerned department.
13. If full and accurate description is used on all store items, the clerical work increases. Even abbreviated descriptions soon lead to confusion. So, it is very necessary that effective code system should be adopted especially where concern deals in large number of items.
14. The national codification also helps in indication of materials or supplies to be ordered, to be withdrawn from the store house and to be used in the manufacturing of the product and in the planning of the product.