This paper presents a methodology for the development of a part classification and coding system suited to each individual company. When coding a group of parts for a specific company by a general purpose part classification & coding system like OPITZ system, it is frequently observed that we use only a small subset of total available code numbers. Such sparsity in the actual occurrences of code numbers implies that we can design a better system which uses digits of the system more parsimoniously. A 2-dimensional fuzzy ISODATA algorithm is developed to extract the important characteristics for the classification from the set of given parts. Based on the extracted characteristics nd the distances between fuzzy clustering cenetroids, a company-unique classification and coding system can be developed. An example case study for a medium sized machine shop is presented.