Methods
ABC Analysis
ABC Analysis: A method of categorizing inventory by value and importance (A=high, B=medium, C=low).
How ABC analysis works
A items are the most important by value, movement, or risk. B items are moderate. C items are lower priority and usually need lighter controls.
How to use ABC analysis
Use ABC groups to decide what to count often, what to review for reorder points, and what needs tighter approval or storage controls.
Common mistake
Do not classify only by revenue. Critical low-cost parts can deserve A-level attention if running out stops work.