ABC Analysis

The ABC analysis allows you to classify materials according to their importance. The main criterion is either the usage value or the requirements value. The document evaluations also can carryout an ABC analysis that is based on usage value or requirements value.

The usage value is calculated by using the usage value that is valuated with the current price taken in the period to analyze.

The requirements value (issues in the future) is derived from the requirements of the MRP (customer orders, dependent requirements) valuated with the price that was saved in the material master.

The results of the ABC analysis are divided into three categories:

  • A materials: important, high usage/requirements value

  • B materials: less important, medium usage/requirements value

  • C materials: relatively unimportant, low usage/requirements value

In general, the higher the usage requirements value, the greater the chances for improvement. In INVCO, therefore, special attention should be paid to materials with a high usage or requirements value.

Performing an ABC Analysis