Treating every product the same is expensive. The safety stock that protects your best-selling product is wasted on one that moves twice a year. The monthly count that keeps a €40 part accurate is overkill for a €0.20 washer.
ABC analysis is a way of sorting products so that the rules fit the product. It takes an afternoon with a spreadsheet, and the result shapes how you reorder, count and store everything.
The idea
In almost every stock list, a small share of products accounts for most of the value that passes through. The usual pattern:
The percentages are a guide, not a rule. What matters is the shape: a few products deserve most of the attention.
How to do it
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Pick the measure. Annual usage value is the usual one: units used in the last 12 months × unit cost. Use units consumed, not units bought, so a one-off bulk purchase does not inflate a product.
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List every product with its annual usage value, from a report or a spreadsheet export.
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Sort from highest to lowest.
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Add a running total of value, and the share of the total it represents.
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Draw the lines. Products up to roughly 80% of the running total are A. The next ones up to roughly 95% are B. The rest are C.
A worked example with eight products:
| Product | Annual usage value | Running share | Class |
|---|---|---|---|
| Motor 2 kW | €48,000 | 48% | A |
| Control board | €30,000 | 78% | A |
| Housing, steel | €9,000 | 87% | B |
| Cable set | €6,000 | 93% | B |
| Bearing 6204 | €3,000 | 96% | C |
| Fixing kit | €2,000 | 98% | C |
| Label sheet | €1,200 | 99% | C |
| Washer M6 | €800 | 100% | C |
Two products out of eight hold 78% of the value. Those two are where an error, a stock-out or an over-order hurts.
What to change for each class
Two refinements
Add a second measure. Value alone misses the cheap part that stops production when it runs out. Some businesses add a criticality class, so a €2 seal that halts a line is treated as A for reordering even though its value puts it in C.
Redo it once a year. Products move between classes as demand changes. A new product with a few months of history will usually land in C by value simply because the history is short, so check new products by hand.
Doing it with StockBold
StockBold does not label products A, B or C, and it does not need to. The figures come from two reports. The inventory valuation report exports every product with its quantity and value on the date you choose, grouped by product, supplier or category. The product turnover report gives each product’s monthly usage and turnover for the period you pick. Multiply usage by unit cost in the spreadsheet, sort, and the classes appear.
You then apply the classes product by product. Each product has its own expected lead time, months of safety stock, cover days and alerts, so an A product can be set to one month of safety stock with 14 cover days and a daily alert, while a C product is set to three months of buffer and 90 cover days. Stock counts can be filtered by supplier or category, which makes a monthly count of your A products one count rather than a hunt through the list.
Export your valuation and turnover reports
Then sort in a spreadsheet and the classes appear.
Read more about stock valuation and reports, or the help guide on setting lead time, safety stock and cover days.