ABC Analysis
Quick answer
Classifying products into three classes (A, B, C) by their contribution to value or revenue, to prioritise management.
Key takeaways
- Counting frequency (A often, C rarely)
- Warehouse placement (A near the picking zone)
- Safety stock level per class
What ABC analysis is
ABC analysis applies the Pareto principle to inventory: class A (~20% of SKUs) drives ~80% of value, class B the medium contribution, class C (~50% of SKUs) only ~5% of value.
Why it matters
It lets you focus attention and capital where they count: tight control of A items, relaxed policies for C. Foundation for slotting, cycle counting and differentiated replenishment policies.
Applications
- Counting frequency (A often, C rarely)
- Warehouse placement (A near the picking zone)
- Safety stock level per class
How CRMconnect helps
CRMconnect recalculates ABC classification automatically from real sales and applies it to slotting, cycle counting and replenishment proposals, with no manual ERP work.
Real-world example
A warehouse with 8,000 SKUs found that 1,400 items (class A) drove 82% of throughput. Moving them to the front zone cut picking time by 19%.
Last updated:
Frequently asked
Is ABC analysis done by value or quantity?+
Most often by throughput value (quantity × price), but it can also be done by volume, order frequency or margin, depending on the goal.
What is ABC-XYZ analysis?+
It combines ABC (value) with XYZ (demand variability), giving a 3×3 matrix for much finer stock policies.
Where CRMconnect fits
Related terms
XYZ Analysis
Classifying products by demand variability (predictability): X = stable, Y = variable, Z = erratic.
LogisticsInventory turnover
How many times stock is fully sold and replenished in a period - a measure of capital efficiency.
LogisticsDead stock
Goods unsold for a long period that lock capital and space, with little prospect of selling at normal price.
LogisticsSlotting
Strategically assigning products to warehouse locations based on rotation, size and affinity to minimise picking effort.