ABC/XYZ analysis: a steerable assortment in 4 steps.
The key points
- The ABC/XYZ analysis divides your assortment by revenue share (ABC) and demand stability (XYZ) into nine classes.
- AX articles can be planned almost fully automatically; CZ articles belong on the phase-out checklist.
- You need 12 to 24 months of consumption history from the ERP for it, nothing else.
- The classification goes stale: recompute at least quarterly.
What does the ABC/XYZ analysis do?
The ABC dimension sorts articles by value share: A articles typically make up 80% of revenue with 20% of the articles. The XYZ dimension measures how predictable demand is, from X (constant) to Z (sporadic). Together they form nine classes that should be planned completely differently.
Which strategy fits which class?
How do you run the analysis? The 4 steps.
The analysis is a snapshot. Assortments turn over: recompute the classification at least quarterly, otherwise you're steering with outdated maps.
Keep reading
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Inventory & PurchasingInventory planning: the second step in inventory management.
Inventory & PurchasingLogistics vs. supply chain management: definition and differences.
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