Client Service Center

Inventory Question Number Six of Seven
Published on by CS3 Technology in Blog Posts


By: Sheri Blaho


  1. ABC Stratification is really a method to prioritize managements' attention to the most important inventory items (A items) and to minimize distractions of unimportant inventory (C items).    


  1. Do I know what my ABC inventory list looks like?



An ABC analysis provides you a mechanism for identifying items that will have a significant impact on overall inventory cost, while also providing a tool for identifying different classifications of stock that will require different management and controls.   



  "A"   items represent 20% of individual stock items that accounts for 70% of the annual consumption value. 

  “B”   items represent 30% of individual stock items that accounts for 25% of annual consumption value

  “C”   items represent 50% of individual stock items that accounts for 5% of annual consumption value. 


A-items should have tight inventory control, more premium storage areas and solid sales forecasts. Reorders should should be frequent, with weekly or even daily reviews of reorder needs. Avoiding stock-outs on A-items is a priority


B-items benefit from the status between A and C. An important aspect of class B is the monitoring of potential evolution toward class A.


Reordering C-items is made less frequently. A typical inventory policy for C-items consist of having only minimal units on hand, and reordering only when an actual purchase is made. This approach leads to stock-out situation after each purchase which can be an acceptable situation, as the C-items present both low demand and higher risk of excessive inventory costs. For C-items, the question is not so much how many units do we stock? but rather do we even keep this item in stock?

(877) 496-1600

Logo for CS3 Technology.





This website is owned by CS3 Technology. CS3 Technology is independent from Sage and is not authorized to make any statement, representation, or warranties or grant any license or permission on behalf of Sage regarding any product, service, or website content. Certain materials made available on or through this website are owned by Sage and cannot be used without the prior written permission of Sage.