When having to manage a warehouse with thousands of different items, how to optimize the process effectively? The answer lies in the classification of goods. In this article, Intech Group will explain in detail the concept of goods classification and its importance in business operations.

What is goods classification?

Goods classification is the process of grouping items based on their unique characteristics, such as composition, structure, physical and chemical properties, uses, packaging specifications and other attributes. Goods classification makes it easier for businesses to manage, store and transport goods in an organized and efficient manner. At the same time, goods classification also ensures that businesses fully comply with legal regulations related to goods during operation.

Purpose of goods classification in logistics management

Goods classification helps optimize processes and create many significant benefits for businesses. Here are some of the main purposes of classifying goods in business operations:

Optimizing storage and transportation processes

When goods are properly classified, warehouse space is maximized, and searching and retrieving goods becomes quick and accurate. Detailed transportation planning, including selecting the right vehicle and determining the optimal route, helps minimize costs and ensures that goods arrive at the right time and place.

Improving warehouse management efficiency

Enterprises can avoid shortages or backlogs, optimize working capital, and minimize the risk of damage and expiration. This not only helps improve warehouse management efficiency but also increases demand forecasting, helping businesses increase their competitiveness in the market.

Ensuring compliance with legal and customs regulations

Classifying goods according to HS codes helps businesses carry out customs procedures quickly and accurately, avoiding legal risks such as fines, goods being retained or returned. In addition, compliance with safety standards in transportation and storage, especially for dangerous goods such as chemicals or explosives, is necessary to protect the environment, people and meet the safety requirements of authorities.

Minimizing risks and losses in goods management

Classifying goods helps businesses easily control product quality and detect substandard products early. At the same time, accurate classification also helps prevent loss, theft, and ensures accuracy in inventory and reporting. Thanks to that, businesses can save costs and enhance the reputation of products and services.

Rules for effective classification of goods

In warehouse and logistics management, classification of goods is an important factor to optimize the storage and transportation process. Goods can be classified according to many different criteria. Below are some basic and common principles of classification of goods:

1. Classification by physical characteristics of goods

Classification of goods according to physical characteristics helps to optimize storage space, convenient for transportation and handling of goods. Physical classification criteria include:

Size:

• Length: Long goods such as wood, pipes, iron bars or short such as small boxes, components.
• Width: Narrow goods such as thin boards or wide such as pallets.
• Height: Low goods such as paper boxes or high such as stacked pallets.

Weight:

• Light goods: Paper, fabric, plastic products...
• Heavy goods: Machinery equipment, raw materials...

Shape:

• Cubular: Box, barrel, cube...
• Cylindrical: Tube, roll, container...
• Round: Ball, sphere, wheel...
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2. Classification by nature of goods

In addition to physical characteristics, goods are also classified by properties that directly affect the preservation and transportation process:

• Perishable goods: Products that are easily degraded or damaged if not properly preserved. For example: Fresh food, fruits, dairy products, pharmaceuticals.
• Dangerous goods: Products that can cause harm to people, property or the environment if not properly transported and preserved. For example: Explosives, toxic substances, radioactive substances, flammable substances, corrosive substances.
• High-value goods: Products with high material value, easily stolen or counterfeited. For example: Jewelry, mobile phones, laptops, luxury watches.

3. Classification by purpose of use

Classifying goods by purpose of use helps determine the role of each type of goods in the supply chain and production and business process:

• Raw materials: Goods used to produce other products. For example: Wood (to make furniture, paper), iron (to make steel, metal products), fabric (to make clothes, household items), plastic, rubber.
• Consumer goods: Products that consumers buy for direct use. For example: Food (rice, meat, vegetables), clothes, household items (refrigerators, televisions, washing machines), cosmetics.
• Import and export goods: Goods imported from abroad or exported internationally. For example: Imported goods include raw materials such as crude oil, cotton, machinery and equipment, and consumer goods such as mobile phones and cars. Exported goods include agricultural products such as coffee, rice, and industrial products such as textiles and footwear.

Effective tools to support product classification

To help businesses optimize the product classification process, there are a number of powerful support tools. Below are important tools to help improve the efficiency of product classification in business operations:

1. Using HS (Harmonized System) codes

HS codes are an international code system used to classify and identify products. Each type of product is assigned a specific HS code, helping countries easily compare and exchange information about the products, thereby promoting international trade. The HS code system not only simplifies customs procedures but also reduces trade barriers, contributing to promoting the global economy.

2. Warehouse management and product classification software

Modern warehouse management and product classification software systems help businesses closely monitor each product from the time of import to export. These software automatically update inventory quantities, helping businesses always know the status of goods, avoiding shortages or overstocking. In addition, the software provides detailed reports on revenue and profits, helping to make more accurate and effective business decisions.

Warehouse management software often integrates outstanding features such as:

• Tracking goods by batch
• Controlling goods about to expire
• Creating ABC analysis reports
• Integrating with ERP (Enterprise Resource Planning) systems
• Thanks to that, businesses can optimize the supply chain, minimize costs and improve competitiveness.

3. Identification and tracking technology (Barcode, RFID)

Barcode and RFID are two popular automatic identification technologies in goods management. Although both technologies help automate the process of data entry, inventory and tracking of goods, they have their own distinct advantages:

• Barcode: Uses black and white stripes to encode information, helping to quickly and accurately identify products during inspection and warehouse exit.
• RFID (Radio Frequency Identification): Uses radio waves to transmit data from tags attached to products. RFID not only helps to read information from a distance but can also simultaneously identify multiple tags, increasing speed and efficiency, especially in environments with large quantities of goods.

Automatic goods classification solutions in the logistics industry

In the logistics industry, the application of automation to large warehouses has become a strong trend. Here are some effective automatic goods sorting solutions of Intech Group:

1. Automatic goods sorting system

Automatic goods sorting system helps to minimize errors in the process of sorting and handling goods. This system can operate continuously for many hours, helping to improve work efficiency and ensure that goods are classified accurately and quickly. Thereby, saving time and costs in the entire supply chain.

2. AGV (Automated Guided Vehicle)

AGV is a solution for transporting goods in the warehouse without direct human intervention. These vehicles move automatically under the supervision of the control system and pre-set programs, ensuring that they move on the right route and transport goods to the right location efficiently and safely.

3. Automatic storage and retrieval system

Automated storage and retrieval system helps to control goods in and out of the warehouse accurately. Automating this process not only helps to minimize loss but also ensures high accuracy in warehouse inventory, creates a safe and flexible working environment and reduces the rate of damage.

4. Automatic loading and unloading robots

Automated loading and unloading robots are extremely useful in large warehouses, especially when moving goods from high positions or in areas that are difficult to access. Using robots saves time and effort compared to manual methods, while minimizing risks during loading and unloading.

5. Smart warehouse systems and conveyors

Conveyors and conveyor systems are important solutions in transporting goods between areas in the warehouse. The application of automation to these systems helps to transport goods quickly, minimize errors and ensure continuity in the sorting and delivery process.

For more details about automatic goods classification solutions, please contact us at: 0966.966.103 or 0966.966.032 for 24/7 support.