ABC analysis

Ranking items by value so you focus effort where it matters.

ABC analysis sorts your items into three groups by annual value. It helps you spend your attention on the items that matter most.

The three groups

• A items. The top roughly 80% of value, often a small share of SKUs. Count often, watch closely.
• B items. The next 15%. Moderate attention.
• C items. The last 5%. Many items, little value. Count rarely.

The exact thresholds are a convention, not a rule. The point is that a handful of items usually dominate your inventory value, and they deserve more accurate records and tighter counting.

How to run it

List each item with its annual value (annual usage × unit cost), sort high to low, and walk down the list accumulating the percentage of total value. Everything up to 80% is A, up to 95% is B, the rest is C.

Classify a list with the ABC analysis calculator.