What is an ABC analysis?
The ABC analysis helps the warehouse clerk to prioritize items and customers, for example. These are sorted and classified according to individual needs.
It is divided into the three possible classes:
- A: very important with mostly low quantity share and high value share. This means that few items contribute a significant amount to the inventory value.
- B: important with mostly average quantities and value.
- C: less important with usually very large quantity share, 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 sales.
In warehousing, ABC analysis is used to identify access frequency and provides an actual situation. In addition, the analysis is used to divide the items into the three categories according to their relative share of the total value of the inventory.
Advantages of ABC analysis:
- Easy to use analysis tool with little effort
- Complex issues can be presented in a simplified way
- Analysis results are clearly listed in a graph
Disadvantages of ABC analysis:
- The classification of the different classes is mostly rough
- The analysis results must be complete and up-to-date
- Other factors can be neglected
