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Breakdown of goods by commercial categories

The proper management of the warehouse and the entire logistics department involves the order and breakdown of goods into sectors. Only by grouping goods in the warehouse in an orderly and precise manner can mistakes such as too many certain products or shortages of others be avoided. These are very easy mistakes to make, but they have serious economic consequences for the company. Therefore, proper organisation of the warehouse is essential for it to function well and smoothly.

That is why G&G considers it important to group goods properly, using different types of criteria, one of which is division by commercial categories. Grouping can be useful in any commercial area, but especially in warehouses that store different types of products. We are thinking, for example, of the warehouses of large clothing and footwear chains, but also of supermarkets that sell different types of products.

The correct cataloguing of goods is also necessary to calculate the stock turnover rate, that is to say, the stock ratio, which shows how many times a stock has been converted into a finished product in a given period. This is an important indicator that allows us to understand the payback period for investments made for each product category.

Classification of goods by commercial category

The grouping of goods in a warehouse by commercial category is perhaps one of the most common methods of breakdown of goods. However, nothing should be left to chance, as an unclear and imprecise grouping would require more work at the storage stage. Therefore, before the breakdown of goods, we proceed to define the categories that are different for each warehouse and functional for their work. We are doing the following:

  • first, we define the objectives of the classification
  • we identify the characteristic features of the products
  • we identify the most relevant characteristics based on the objectives set
  • we define classes related to certain characteristics
  • we assign goods to a class

If necessary, we can also designate subgroups within a defined and established class to group the classification of products and make it even more detailed. There are companies that have very different goods, some very similar to each other, but with different characteristics that require careful and meticulous classification.

Classification by product category is followed by codification

However, once the goods have been broken down into commercial categories, the work of the warehouse does not end. When the products are correctly arranged according to common characteristics, more or less precise, we move on to the next stage, that is coding. Each product category should be clearly identified so as not to cause chaos in the management of purchases and sales. The coding of products should meet certain criteria and should be aimed at finding the goods needed quickly and accurately, possibly using computer systems based on alphanumeric codes. At the coding stage, our aim is to achieve the highest possible level in terms of coding:

  • accuracy between the code and the product
  • conciseness, i.e. simplicity of using the code
  • code expansion, useful for the future
  • practicality, i.e. the use of practical and functional codes that minimise confusion in recognising them
  • the meaning, i.e. the choice of codes that are associated with the type of product on which they are placed.

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