Meaning of Grading and Its Advantages

Meaning of 'Grading'

Grading or categorization is just a part of the standardization by the Institute. By the term 'grading' is meant the classifying and categorizing the products into groups on the basis of the general characteristics found in them.

In the opinion of Clark and Clark, The meaning of the term `grading' is classifying the products into such categories which, from the point of view of shape, size, or kind, are almost similar or into such standardized categories to which they conform.

With regard to the products manufactured in the factories, there doesn't arise any problem of grading since these are already standardized beforehand. The problem of grading arises in the agricultural products, minerals, etc. mostly. If the agricultural products or the minerals are not graded, they will neither fetch full price nor would they be able to fully satisfy the consumers' needs. That's why the problem of grading arises. For instance, from the agriculture, the cotton is grown, it becomes essential to get it graded in separate categories. For instance, there might be the long-stapled cotton, medium and short stapled cotton, etc. Likewise, the coal extracted out of the mines, is distributed into various categories, for instance, the coking, non-coking, hard and soft coke, etc.

Advantages of the Gradation

The following are some of the main uses or advantages of the grading system:

(1)   Complete Satisfaction to Consumers. If the agricultural products or the minerals are not categorized or graded, these won't be able to fully satisfy the needs of the consumers.

(2)   Help to the Manufacturers in Production. Due to the gradation, the manufacturers get help in the production of one and the same (uniform) type of the products.

(3)   Help to the Sellers in Their Sales. The things that are graded could be sold only by showing of their samples or by description. The graded products are purchased by the buyers simply by showing them, and without any minute checking.

(4)   Facility in Availing the Loans. On the basis of the security of the graded things, the loans could be easily obtained. The financers are not required to undertake any special checking or investigating such goods for advancing the loans.

(5)   Facility in the Prospective Purchases. By gradation, the categories of the similar things are formed which lead to easy recognition of the products, and consequently the future contracts of forward nature could be easily undertaken about them.