ABC Analysis

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ABC Analysis

Scope

This procedure covers defining an ABC analysis including determining the relative value of items in the database, ranking items according to multiple criteria, and grouping items into classes that represent the relative value of the items.

System References

ABC Analysis - Creating a Compile

ABC Analysis - Generating ABC Descending Value Report

ABC Analysis - Defining Classes

ABC Analysis - Defining Assignment Groups

ABC Analysis - Associating Classes and Assignment Groups

ABC Analysis - Assigning Items to Classes

ABC Analysis - Updating Item Assignments

ABC Analysis - Generating the ABC Assignment Report

Policy

ABC analysis is performed if an inventory organization uses Cycle Counting to take inventory and is used to determine the frequency with which each item is counted.

ABC Compile must be purged and run again in order to included newly added items in the cycle count. This process must be done periodically as determined by the INV Administrator.

Responsibility

The INV Administrator is responsible for determining the relative value of items and ranking them using the ABC analysis.

Distribution

Director of Procurement Services

INV Administrator^*

Ownership

The Director of Procurement Services is responsible for ensuring that this document is necessary, reflects actual practice, and supports University policy.

Activity Preface

This activity is performed whenever a new inventory is created which will use Cycle Counting and when a new item is added to an existing inventory that uses Cycle Counting.

INV Administrator

1. Determine whether you wish to create new ABC analysis or edit an existing one.

You can add new items or edit items in an existing ABC analysis.

If you wish to edit an existing ABC Analysis, goto task #8. Otherwise, goto task #2.

2. Create the ABC compile.

The ABC compile ranks all the items in your inventory based upon criteria you select. This ranking is used to assign classes to your items.

Inventory
N ® ABC Codes ® ABC Compiles
B ® New
Define ABC Compile

Refer to ABC Analysis - Creating a Compile.

3. Generate the ABC Descending Value report.

This step may have been performed as part of step 2, however you may run the report at a later time.

Inventory
N ® Reports ® ABC and Counting
S ® Single Request
B ® OK
ABC and Counting Reports

Refer to ABC Analysis - Generating ABC Descending Value Report.

4. Define class names.

Use your own terminology to determine what are commonly used as ABC classes. Define class names that suit your business environment.

Inventory
N ® ABC Codes ® ABC Classes
ABC Classes

Refer to ABC Analysis - Defining Classes.

5. Define an ABC assignment group.

Create a group name.
Assign the compile to the group.

Inventory
N ® ABC Codes ® ABC Assignment Groups
ABC Assignment Groups

Refer to ABC Analysis - Defining Assignment Groups.

6. Associate classes with the assignment group.

Choose classes to use with the assignment group.
Assign ranking to the classes within an assignment group.

Inventory
N ® ABC Codes ® ABC Assignment Groups
B ® Group Classes
ABC Group Class Assignment

Refer to ABC Analysis - Associating Classes and Assignment Groups.

7. Assign items to the classes.

Assignment may be made based upon the following criteria:

Sequence number
Items Percent
Inventory Value
Value Percent

Inventory
N ® ABC Codes ® ABC Assignment Groups
B ® Assign Items
Assign ABC Items

Refer to ABC Analysis - Assigning Items to Classes.

If you want to manually change the class of an item or add a new item, goto task #8. Otherwise, goto task #9.

8. Update ABC assignment groups.

Inventory
N ® ABC Codes ® ABC Assignment Groups
B ® Update Items
Update ABC Assignments

Refer to ABC Analysis - Updating Item Assignments.

9. Execute ABC Assignments Report.

The ABC Assignments Report will display all items and the classes of the items.

Inventory
N ® Reports ® ABC and Counting
S ® Single Request
B ® OK
ABC and Counting Reports

Refer to ABC Analysis - Generating the ABC Assignment Report.

10. Review report for errors.

If there are errors in class assignments, goto task #8. Otherwise, end of activity.

Goto Cycle Counting.

Effective: 08/13/04

Revision: 2