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CHEAT SHEET
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O n O n O n O n O n O n O n
L A L A L A L A L A L A L A
L A L A L A L A L A L A @OnesphoreRAKOTOMALALAL A
What is ABC Analysis? M A M A M A Why
M A Use ABC Analysis? M A M A M A
T O T O T O T O TO T O T O
ABC Analysis isKanOinventory categorization KOmethod used to prioritiKzOe items based on KO Helps focus efforts KOon the most critical inventory
KO items. KO
R
their importance A to the company. RA R A R A R A R A R A
e e e e Ensures optimal
e use of resources and e inventory investment.re
r
o inventory into three r
ocategories: o r o r o r o r o
h
It segments h h h h h h
e sp e sp e sp e sp e sp better strategiceplanning
Supports sp and decision-making. e sp
On A items: High-value Onitems with high importance On On On Improves cash flow byOnoptimizing stock levels O n
based on item importance.
B items: Moderate-value items L Awith moderate importance L A L A L A L A L A L A
L A L A L A L A L A L A L A
M
C items: Low-value items A with low importanceMA M A M A M A M A M A
T O T O T O T O ample of an ABC
Ex TO Analysis Calculation T O T O
It is based on the KO KO
Pareto principle (80/20 rule). K O K O KO KO KO
R A R A A
@OnesphoreRAKOTOMALALA
R R A R A R A R A
o re o re o re o re Itemor
e Annual Usage oUnit re Cost Annual Consumption o re Value
p h p h h
p @OnesphoreRAKOTOMALALA p h p h p h p h
s
eHow to Conduct s
e an ABC Analysis e s e s e Xs e s s
e $100,000
O n O n O n O n O n O
1000n $100 O n
1. Gather Data: Collect inventory data L A such as sales volume,Lcost,A and usage frequency. L A Y LA L A$10 L A,000 L A
L A L A L A L A 5000
L A L A$50
L A
2. Calculate Annual Consumption
M A Value: Multiply annual M A usage by unit cost forMeach
A item. M AZ 10000 A
M $1
M A $10,000 M A
T O T O T O T O TO T O T O
3. Sort Items: Rank KOitems in descending order KO based on annual consumption
K O value. K O KO KO KO
R A R A R A R A Total Annual A
Consumption
R Value: $160,000
R A R A
4. Classify
o reItems: Divide items intooA,reB, and C categories based o reon cumulative percentage:o re o re o re o re
p h A items: Top 20% of items,p h represent 70-80% ofptotal h value. p h ItempX: h ($100,000 / $160,000) *p100h = 62.5% (CategorypA)h
n es n es n es n es n
s
eItem n e s
n e s
O B items: NextO 30% of items, represent O of total value. O
15-25% O O * 100 = 31.25% (Category
Y: ($50,000 / $160,000) O B)
L A L A L A L A / $160,000)* 100 = 6.25% L A L A L A
C items: RemainingA50% L Aof items, represent 5A-10% L Aof total value. A L A Item
A LZ:A($10,000
A L A (Category
A
C)
L A @OnesphoreRAKOTOMALALA
A L A
O M O M O M O M O M O M O M
O T O T ABC O T
Analysis in InveK T
O ry Manageme
nto Ont T O T O T
A K A K A K A A K A K A K
R R R R R R R
o re o re o re o re o re o re o re
p h h monitoring, ph
Tight control, pfrequent p hModerate control andpregularh p h Loose control,p h periodic monitoring,
n es es
accuratenforecasts n es n es monitoring n es n es es
bulk ordering
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O A items O O O
B items O O C items O
L A L A L A L A L A L A L A
L A L A L A L A L A L A L A
M A M A M A M A M A M A M A
T
Benefits oKfOABC AnalysisKO O T O T O
@OnesphoreRAKOTOMALALA
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L im itations o f TO
ABC Analysis T O T O
@OnesphoreRAKOTOMALALA

K O K O KO KO KO
Focus e on
A items ensures thatRimportant
Rcritical A inventory is R
al
Aays available. R A oesn t considerR Alead time or criticality RofAitems. R A
o r o re o re w
o re D '
o re o re o re
p h allocation of resources
Better p h and reduced carryingpcosts. h p h May p h
oversimplify inventory p h
management. p h
n es n es n es n es n es n es n es
O Streamlined inventory O control processes and O better decision-making. O O Requires regular updates O to remain effective. O
L Aleads to improved service L A levels. L A L Athe importance of low-Lvalue,A high-volume items.L A L A
L A
Higher availability of key products
L A L A May A
neglect
L L A L A L A
M A M A M A M A M A M A M A
T O T O T O T O TO T O T O
KO KO K O K O KO KO KO
Key Peerf RAormance Indicato R A rs to Track RA R A Tools andRSAoftware for ABC R A Analysis A
@OnesphoreRAKOTOMALALA
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o r o re o re o re o re o re o re
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pInventory ph Order fill rate. sp
h ph ph ph ph
e s turnover s
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e e e s e s e s e s
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O Carrying cost by category. O n n n n n n
Days of Oinventory on hand. O O O O
L A L A L A L A SAP L A L A L A
Stock-out frequency. L A L A L A EXCEL
L A L A L A management softwLareA
UNLEASHED

M A M A M A For basic
M Aanalysis ERP
M A
systems S
M A
pecialized inventory
M A
T O T O O
@OnesphoreRAKOTOMALALA
T T O TO T O T O
KO KO K O K O KO KO KO
R A R A R A ABC Analysis R ABest PracticeRs A R A R A
o re o re o re o re o re o re o re
h ABC analysis regularly
pConduct ph (e.g., quarterly orsannually).
ph ph phAdjust classification criteriaph based on companysneeds. ph
e s e s e e s e s e s e
n
O Use multiple criteria n n
O (e.g., profit margin, leadOtime) for classification. O n O n n
O with other techniques
Combine ABC analysis n
O (e.g., XYZ analysis).
L A L A L A L A L A L A L A
Involve cross-functional teams L A in the analysis and decision
L A -making process. L A L A
Automate the process wLithAinventory management L Asoftware. L A
M A M A M A @OnesphoreRAKOTOMALALAM A M A M A M A
T O T O T O T O TO T O T O
KO KO K O K O KO KO KO
R A R A R A R A R A R A R A
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