XYZ Analysis – improving inventory management
In this eGuide you’ll learn everything you need to know about classifying inventory.
We’ll show you how XYZ analysis models can help you prioritise your time and set more effective inventory policies that focus on the availability of your most important products.
XYZ analysis is a framework used to categorise products based on their variability of demand. This means you can segment items based on their forecastability e.g the likelihood that their demand will vary from their forecast.
X items = regular demand
Y items = strong variability in demand
Z items = very irregular and difficult to predict demand
You can then set specific inventory rules for each group of products that will make the biggest difference to your business.
XYZ inventory analysis is an easy way to help manage your inventory, but it also has a number of limitations. For starters it only uses two factors 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 Secondly it’s a manual process that takes up value time and quickly becomes out-of-date.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 – inventory optimisation software – to automate the process.
EazyStock connects to your current stock system and takes XYZ 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 in your warehouse? 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 stock availability?
In this eBook we’ll introduce ABC and XYZ analysis and provide a simple framework for segmenting your stock items, based on their value and importance to your business.
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