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Sign up todayNot all of your products are worth the same to your business. ABC Analysis is an inventory categorisation technique used to prioritise stock management based on the significance of different items. It classifies inventory into three categories — A, B, and C — based on their value and contribution to overall sales or consumption. This method follows the Pareto Principle (80/20 rule), which suggests that a small percentage of items account for the majority of inventory value.
Inventory items are categorised as follows:
1. Category A (high-value, low-quantity items)
2. Category B (moderate-value, moderate-quantity items)
3. Category C (low-value, high-quantity items)
ABC Analysis helps businesses optimise inventory management by ensuring that resources and attention are focused on the most valuable stock items. By categorising inventory efficiently, you can improve cost control, streamline operations and enhance profitability.
Keep up to date with ecommerce news, trends and articles. Brought to you by Stock2Shop.
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