The ABC classification isolates the most important materials for the company, while the XYZ classification examines the regularity of their consumption.
ABC/XYZ analysis is based on the Pareto Principle, which assumes that 80% of value comes from 20% of materials.
The ABC classification divides materials into three groups according to their value: A (most important), B (medium) and C (low).
The XYZ classification divides materials total oil and gas company canada whatsapp number into three groups according to the regularity of consumption: X (regular), Y (variable) and Z (irregular).
The ABC/XYZ matrix consists of nine classification groups, where the AX group is the most relevant and the CZ group is the least relevant.
Appropriate inventory management methods can be used for each of the ABC/XYZ groups, for example, just-in-time for the AX group.
Putting ABC/XYZ analysis into practice can greatly simplify warehouse management and help optimize a company's processes.
Wondering why your business isn't growing as smoothly as expected? Formalities aren't everything. If you're a business with a large, medium or small warehouse and you know that the arrangement of goods in it isn't up to par, it might be worth exploring the concept of ABC/XYZ analysis.
Why optimize inventory management
Optimizing warehouse stock management is crucial for several reasons. Firstly, it reduces the costs associated with storage, warehouse maintenance and dealing with suppliers and customers, which translates into greater profitability for the company. Introducing improvements in warehouse processes contributes to a better use of resources such as space, working time or equipment, which translates into greater efficiency for the company.
Taking stock control into account, proper management allows the company to maintain an adequate level of products in stock, reducing the risk of stock-outs and avoiding unnecessary excess merchandise. As a result, the company is better able to meet customer expectations, which translates into greater customer loyalty and satisfaction.