ABC analysis – to improve inventory management
This guide introduces ABC analysis and provides a simple framework for segmenting stock items, based on their value and importance to your business.
It shows you how stock classification techniques can help you prioritise workload and focus on the areas that matter!
And how EazyStock inventory optimisation software can dynamically classify items and optimise inventory levels without the need for any spreadsheets.
ABC analysis lets you classify stock into three groups, based on their value to your business:
A items: usually the smallest category but made up of the most important stock.
B items: generally a larger group of SKUs containing products of less value to the business.
C items: typically the largest category where items are the least important.
You can then set specific inventory rules for each group of products that will make the biggest difference to your business.
ABC analysis is an easy way to help manage your inventory, but it also has a number of limitations. For starters it’s one-dimensional and only uses one factor to evaluate and categorise products. Secondly it’s a manual process that takes up value time and quickly becomes out-of-date.
The answer is to use EazyStock, an inventory optimisation tool, to automate the process.
EazyStock connects to your current stock system and takes ABC analysis to the next level. It categorises inventory based on a range of variables, including demand, sales frequency, number of picks and annual consumption value.
Inventory policies are set and automatically updated based on service level targets and safety stock levels for each item.
With the analysis and hard work done for you, you’re then able to manage by exception, focusing on the items that EazyStock suggests need your attention.
Do you often question whether you’re stocking the right products? Do you wonder how to prioritise your time to focus on the most important SKUs? Are you constantly trying to reduce inventory levels without affecting availability?
In this guide we introduce ABC and XYZ analysis and provide a simple framework for segmenting stock items, based on their value and importance to your business.
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