This chapter contains these topics:
To rank and analyze customer sales activity and review the average number of days that it takes each customer to pay
ABC Analysis is a well recognized method for classifying objects according to their level of importance based on the criteria that you specify.
In Accounts Receivable, the ABC Customer Analysis program is used to group customers based on two different criteria:
Aggregate sales
The average number of days to pay
Understanding the relationship between these two groupings, helps you manage your customers and cash flow.
One example of using ABC Analysis is derived from the 80/20 rule, which states that 80% of sales are derived from 20% of your customer base. By identifying this group of customers and reviewing their ability to pay on time, you can analyze your customers' performance.
From Accounts Receivable (G03), enter 27
From A/R Advanced and Technical Operations (G0331), choose ABC Customer Analysis
To calculate and rank customer sales activity and the number of days it takes them to pay, run ABC Customer Analysis (P03602).
ABC Customer Analysis generates information based on the parameters that you define and allows you to analyze a customer's activity according to your business requirements.
You can run this program in proof or final mode. In proof mode, the system:
Calculates the sales percentages and ranks each customer accordingly
Retrieves the stored value for the number of days to pay
Assigns a code (A through D) for the sales percentile based on the parameters defined in the Data Dictionary
Assigns a code (A through D) for the number of days to pay based on the parameters defined in the Data Dictionary
Generates a report
In final mode, the system updates the ABC1 and ABC3 field in each Customer Master record (F0301) with the code that it assigns and displays on the report.
Run Recalculate Average Days Late (P03830) to update the AVD field in the Customer Master record that the system uses to assign the A, B, C, or D code on the report.
Set the sales percentile values in the Data Dictionary for data items A1A, A2A, and A3A.
Set the average days values in the Data Dictionary for data items A1C, A2C, and A3C.
When you run ABC Customer Analysis, the system calculates two ABC categories based on percentages you set up in the data dictionary.
The following report is an example based on the following settings of the Data Dictionary items:
A1A = 85
A2A = 70
A3A = 60
A1C = 5
A2C = 60
A3C = 90
03602 JD Edwards World
Customer Analysis
Final
. . . . . . Address . . . . . . Year to Date % A/R % A Rank
Number Name Sales Sales Days S D
-------- ---------------------------------------- ------------- ----- ---- - - ------
4242 Corporate Office Systems Company 766,788 42.1 703 A D 1
1500 Plant Are Us 346,705 19.0 38 D B 2
22201 Ericson Corp. 226,650 12.4 5 D A 3
1001 Edwards, J.D. & Company 114,385 6.3 374 D D 4
4175 Abernathy & Hitch 80,141 4.4 110 D D 5
701 NLS Test 76,765 4.2 147 D D 6
7003 Euromart 49,695 2.7 6 D B 7
7001 JD Edwards World Europe 36,582 2.0 10 D B 8
6736 Tattered Books 35,480 1.9 19 D B 9
631000 SBC - Sociedade Brasileira de Computação 24,931 1.4 2 D A 10
1514 Weavings 19,587 1.1 127 D D 11
1314 PD Manufacturing Co 16,351 .9 46 D B 12
6613 Pizza Guy 14,625 .8 45 D B 13