What is ABC Analysis

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ABC Analysis is an intrinsic part of supply chain management and is the categorization of products into groups sorted by their spend volume. Given Pareto analysis a typical ABC analysis might find that 20% of a products equate for 70% of the value, these are termed A’s and are the more expensive group (often comprised of complex assets) . Cheap consumable (and often easily replaceable items) fall into the “C” class.

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2 Responses to “What is ABC Analysis”

  1. 10 Ways To Improve Supply Chain Inventory Management : supplychain-mechanic.com on July 19th, 2010 8:12 pm

    […] is working well and where any areas of weakness are. Remember data analysis is key – tools like ABC analysis can really help you in understanding your inventory. 2. Reduce the storage costs for inventory: By […]

  2. 3 tips on using Pareto for Supply Chain : supplychain-mechanic.com on September 14th, 2010 3:53 pm

    […] Applying Pareto principles and methods to your parts when conducting ABC analysis.  All parts are not equal – you don’t manage 5 cent screws the same way as a $50,000 part different ordering and inventory management techniques.  ABC is used as a method to segment your parts/inventory allowing you to manage each appropriately.  Click here for more on ABC analysis […]