ABC Analysis

ABC analysis is a classification method that divides inventory items into three groups according to their importance. Products are usually ranked by their annual usage value (quantity multiplied by unit price) and split into three classes: A, B, and C. Group A holds the few items that account for the largest share of total value, while group C holds the many items that contribute little to total value. Group B sits in between.

This method matters for retail and wholesale businesses, because instead of giving every product equal attention, it directs limited time and capital toward the items that generate the most value. For example, in a store the few fast-selling group A products can be counted often and reordered with a careful plan, while group C items can be checked less frequently. To build an accurate ABC analysis, the sales and value data behind each product must be current and reliable. Using inventory management software to run this classification on sound data and track movements automatically makes the work easier. For sector-specific needs, you can explore the market inventory software solution.