ABC analysis

An ABC analysis divides items into groups based on their relative importance. Often, the annual consumption value is used for this: the annual consumption multiplied by the value per unit. The method aligns with the Pareto principle, where a limited proportion of items represents a large proportion of the value. The exact distribution is not a fixed law.

In inventory management, A-items may be reviewed or counted more frequently than items with a lower financial impact. For warehouse layout, pick frequency is often a more relevant criterion than consumption value. Therefore, always state what the classification is based on and take additional factors into account, such as critical parts, shelf life, and supply risk.

A well-chosen ABC classification helps focus time and attention on items where a discrepancy has major consequences. This supports targeted counts, better inventory policy, and smarter pick locations. Repeat the analysis regularly: product range and demand change, which can cause an old classification to lose its value.