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A. Coding is the process of representing each item by numbers and alphabets. It is a straight
forward and easy way of describing and identifying items in stores or warehouse.
The inventory of any company has thousands and thousands of items, which will only
keep increasing if steps are not taken to reduce them. To begin the processes reduction,
the first step required is to uniquely and unambiguously identify each and every one of
the items. This is done by a number to each item called a code. The process is called

Five reasons why an organization should take coding as an essential element in effective
management of warehousing are:

1. Assistance to purchase: Because when the organization operates a coding system,

purchasing is also giving a copy of the store vocabulary or catalogue which will contain
all information needed to understand the request made by stores. This will save the
confusion in using long descriptive requisition in the organization.
2. Simplicity: This means that a long and complex requisition need not be completed. By
using a simple series of letters (ABCDEF) and digits (123456), the exact item required
can be communicated to the storekeeper. With this simplicity, it will help the
organization to save time effort. Unlike a situation whereby, there is no coding of items at
the warehouse, where long and complex requisitions becomes a burden unto the
storekeeper. Spending so much time before issuing the items and even it might not be
completed due to inability to locate the items and when this happens, the work of the said
department to who items needs to be issued to operations delays as a result of delays in
3. Reduction of errors: Because of the exact code and its basic logical approach, it is quite
difficult to make an error in identification, unlike the using of long descriptions. When
you use coding in your warehouse or stores properly and simply, it makes it easy for the
organization or the storekeeper to identify errors or mistakes that are in the warehouse in
terms of its codification and identification of items.
4. Accuracy of selections: this is also another why an organization should take coding as an
essential element because having been giving the exact code number for the item
required, the storekeeper will be in a position to select and issue the item without the
possibility of a miss-issue. This is a great advantage in relation to highly technical or
complex items which may appear visually identical. And adopting the barcode for
instance, in the days before barcode technology, many businesses relied on clerks to
manually enter information about packages that came across their desks. In the
transportation industry, where packages change hands several times, the likelihood of
human error increased considerably because barcodes offer a reliable way to accurately
read encoded information, the technology all but eliminates the possibility of human
5. Coding enables better controls to be exercised on consumption, purchase and storage of
inventory items especially by the use of electronic data processing.

B. Standardization is a framework of agreements to which all relevant parties in an industry or

organization must adhere to ensure that all processes associated with the creation of a good or
performance of service are performed within set guidelines. This ensures that the end product has
consistent quality and that a conclusions made are comparable with all other equivalent items in
the same class. The goal of standardization is to enforce a level of consistency or uniformity to
certain practices or operations within the selected environment. While variety reduction is the
process of reducing the number of types, size or grades of a product that are purchased, made or
stocked. Variety reduction comes as a result of stocks variety being greater than the number or
what is needed. The goal of variety reduction is to reduce the number of varieties in the store so
as to get what the organization needed in order to carry on their operation to get quality product.
So in the nut shell, standardization is agreeing on the exact procedures, size, quality, designs etc.
while variety reduction is the totality of reducing the greater variety to stock so as to get exact

Four Importance of standardization is;

1. The use of standardization of items saves money in terms of lower process, lower
processing costs, lower inventory carrying cost and fewer quantity problems.
2. It facilitates longer production runs and automation.
3. The use of standardization helps in better understanding of customer requirements.
4. There is reduction of overall stock level standardization may mean that several medium
sized stocks can be replaced by a proportional smaller larger stocks.

Four Importance of variety reduction is;

1. Since the numbers of items are reduced due to variety reduction, the increased of quantity
of an individual item can lead to more economical price, because of larger quantities. It is
possible to establish specifications for parts and route wise purchase activities.
2. Fewer items will mean more personalized attention and there will be fewer stock outs and
service level will also improve.
3. The use of variety reduction makes inventory carrying cost reduce because less
inventories are been held.
4. Variety reduction makes stocktaking easier since there are a few items to be verified.
The three limitations of variety reduction are;
1. Quantity discount arriving from large purchases may be lost since we always procure and
hold/stock in smaller quantity.
2. Consumers or users may not have a wide range of items to choose from.
3. Variety reduction may affect emergency cases.