What is an ABC analysis?
The ABC analysis helps warehouse staff to prioritize items and customers, for example. These are sorted and classified according to individual requirements.
It is divided into the three possible classes:
- A: very important with mostly low quantity share and high value share. This means that a small number of items contribute a significant proportion of the stock value.
- B: important with mostly average quantities and value.
- C: less important with usually very large quantities, but low storage value.
With the help of this classification, items in category A can be managed more intensively than items in category C, as these generate the higher turnover.
In warehousing, the ABC analysis is used to identify access frequency and provides an actual situation. In addition, the items are divided into the three categories using the analysis according to their relative share of the total stock value.
Advantages of the ABC analysis:
- Easy-to-use analysis tool with little effort
- Complex issues can be simplified
- Analysis results are clearly presented in a graphic
Disadvantages of the ABC analysis:
- The classification of the different classes is usually rough
- The analysis results must be complete and up-to-date
- Other factors can be neglected
