ABC Analysis

ABC Analysis

What are you going to learn?

  • How to calculate ABC Codes
  • How to change the unit of measure
  • How to download your report

ABC Analysis

To access the ABC Analysis screen, click the ABC Analysis button in the upper left hand corner.

The "ABC Analysis" tab allows you to switch between ABC sets and change the percentage cutoffs to determine each SKUs letter ranking. The ABC Analysis menu looks like this:

1) Run Forecasts - This tab displays the forecasting section.

2) ABC Analysis - This tab displays the ABC analysis.

3) Calculate - Calculate the ABC codes for all the data, or just your current filter set.

4) ABC Set - Create a new ABC set or overwrite a current ABC set.

5) Unit Type - Calculate ABC codes based on each SKUs units, Price, Cost, Margin, Weight, Volume, Cases, Pallets, or Packages.

6) Periods - Calculate ABC codes using a specified number of previous sales periods, or calculate ABC codes using a number of forecast periods in the future. For example, putting 12 sales periods and 0 forecast periods would calculate the ABC codes based on each SKUs previous 12 months of sales history. Putting 12 forecast periods and 0 sales periods would calculate ABC codes based on the upcoming 12 months of sales in the forecast. Setting 12 sales periods and 12 forecast periods would calculate ABC codes using both the past 12 months of sales history and the upcoming 12 months of predicted sales. This would be a 24 month range.

7) Cutoffs - Select the percentage at which each ABC code cuts off. For example, let's say you have 7 SKUs: SKU 1, SKU 2, SKU 3, SKU 4, SKU 5, SKU 6, SKU 7, and you select "Unit" as the unit type. We'll set the cutoff for code A at 80%, code B at 15%, code C at 4%, and code D at 1%.

We'll say you have sold 100,000 units total in the past 12 sales periods.

SKU 1 has sold 60,000 units.

SKU 2 has sold 20,000 units.

SKU 3 has sold 10,000 units

SKU 4 has sold 5,000 units

SKU 5 has sold 2,000 units

SKU 6 has sold 2,000 units

and SKU 7 has sold 1,000 units

Your ABC codes would be as follows: SKU 1 and SKU 2 would be code A because they made up 80% of the sales. We have now accounted for 80% of the sales with SKUs 1 and 2.

SKU 3 and SKU 4 would be code B because they made up the next 15% of the sales. We have now accounted for 95% of the sales with SKUs 1, 2, 3, and 4.

SKU 5 and SKU 6 would be code C because they made up 4% of the sales. We have now accounted for 99% of the sales with SKUs 1, 2, 3, 4, 5, and 6.

and SKU 7 would be code D because it made up 1% of the sales. Finally, we have now accounted for 100% of the sales with SKUs 1, 2, 3, 4, 5, 6, and 7.

8) Run/Cancel - Run a forecast and see the calculated ABC codes (this is not final, just a summary of the data.) Or click cancel and exit the screen with no saved changes.

When clicking "Run" a new window will open. This window is divided into the 2 sections described below:


Summary

1) Summary - This tab shows a summary of the total calculated ABC codes.

2) Report - This tab gives a report of each SKU and how it was ranked.

3) Code - This column shows the code.

4) Unit - The number of units in each code

5) Item Total- The total number of SKUs in each code.

6) Item Total % - The percentage of units in each code out of the total.

7) Back - Go back to the ABC analysis screen and make adjustments.

8) Save/Close - Save and apply these codes to these SKUs, or cancel and close the window.

Report

1) Summary - This tab shows a summary of the total calculated ABC codes.

2) Report - This tab gives a report of each SKU and how it was ranked.

3) SKU - Shows each SKU name.

4) Location - Shows each location of each SKU.

5) Value - Shows the # of units of the SKU sold at that location.

6) % - This number represents the percentage this SKU made up of the sales.

7) Cumulative % - This is the percentage combined with the prior SKUs that make up the percentile in which each SKU is categorized. For example, in our selected settings, anything with a cumulative % of 80% or less will be an A code.

8) ABC Code - The code given to this SKU at this location.

9) ABC Ranking - How each SKU and location ranked based on sales in the periods. (Helps you see your best and worst SKU/Location.)

10) UOM - Unit Of Measure used to calculate the ABC code.

11) Description - Name of the SKU at that location.

12) Back - Go back to the ABC analysis screen and make adjustments.

13) Save/ Close - Save and apply these codes to these SKUs, or cancel and close the window.

Units

You can adjust the unit of measure that your forecast is in by clicking the "Units"  button located in the upper right-hand corner of your screen.

Once clicked, a window will open showing all of the units of measure you are able to forecast in.

1)

Unit - The whole number of items sold.

Price - The price you sold the item at.

Cost - The cost to you for each item.

Margin - How much money you made from the sale of each item. (Price - Cost = Margin)

Weight - The weight of each item.

Volume - The Volume of each item.

Cases - The number of cases sold. (Set the # of items per case for each SKU/Location in the import tool or item manager.)

Pallets - The number of pallets sold. (Set the # of items per pallet for each SKU/Location in the import tool or item manager.)

Packages - The number of packages sold. (Set the # of items per package for each SKU/Location in the import tool or item manager.)

2) Save/Cancel - Save and apply the new selected unit of measure, or cancel and use the previously used unit of measure.

As displayed above, there are a wide variety of units of measure to pick from: Unit, Price, Cost, Margin, Weight, Volume, Cases, Pallets, and Packages.

Download Report

The "Download Report" Feature allows you to download a report of your sales forecast offline. When clicked, a download of the current tab you are on will be downloaded as a .xls file. I.e. if you have the "Forecasting" tab open, the forecasting chart data will be downloaded.

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