HML & SDE CLASSIFICATION

·      HML Classifications:-

The High, medium and Low (HML) classification follows the same procedure as is adopted  in ABC classification. Only difference is that in HML, the classification unit value is the criterion and not the annual consumption value. The items of inventory should be listed in the descending order of unit value and it is up to the management to fix limits for three categories. For examples, the management may decide that all units with unit value of Rs. 2000 and above will be ‘H’ items, Rs. 1000 to 2000 ‘M’ items and less than Rs. 1000 ‘L’ items.The HML analysis is useful for keeping control over consumption at departmental levels, for deciding the frequency of physical verification, and for controlling purchases.

SDE Classification:-

The SDE analysis is based upon the availability of items and is very useful in the context of scarcity of supply. In this analysis, ‘S’ refers to ‘scarce’ items, generally imported, and those which are in short supply. ‘D’ refers to difficult items which are available indigenously but are difficult items to procure. Items which have to come from distant places or for which reliable suppliers are difficult to come by fall into ‘D’ category. ‘E’ refers to items which are easy to acquire and which are available in the local markets.The SDE classification, based on problems faced in procurement, is vital to the lead time analysis and in deciding on purchasing strategies.