Methods of coding materials:

(1) By nature of item: This is coding of items according to their inherent characteristics. Similar items into a series of main groups then each group is further subdivided into sub groups or sections
(2) By the end use of the item: This is coding of items according to or to correspond with the purposes for which the items will eventually be used.
(3) By the location of the item: This is the coding of materials on the basis of the location within the store where the materials are to be found e.g. the gangways, shelves, pallets etc.
(4) By source of supply: Here materials are coded according to the supplier or origin. If there are three suppliers the coding would be 1,2,3 or A, B,C. Coding of materials may be in accordance to local or international sources
(5) By the customer who will buy the end item: here materials are coded according to the final consumer who will eventually buy the end product e.g. individual consumer, industrial consumer, institutional consumers or resell government bodies.