The supply manager can identify inventory hot spots, and separate them from the rest of the items, especially those that are numerous but not that profitable.
The ABC analysis is an inventory categorization technique often used in material management wherein accuracy and control decreases from A to C
The ABC analysis provides a mechanism for identifying items that will have a significant impact on overall inventory cost, while also providing a mechanism for identifying different categories of stock that will require different management and controls
ABC analysis - also called selective inventory control;categorises inventory of items by grouping such items into three categories of estimated inportance: '"A" items - very important ,"B" items - Inportant,"C" items - least important.
This is a chellenge to inventory managers. Identifying which items fall in the respective categories usually becomes complex. Demand keeps on changing from time to time.A company may overstock or under stock items due to unstable demand.
time.
ABC analysis is an important tool which enables the management in their efforts to achieve the best possible results.
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