Working with ABC/Velocity Codes (WABC)

ABC/Velocity codes are an industry-wide standard used to measure the velocity of your sales and to classify items based on your sales volume.

In this topic:

• ABC/Velocity Process

• Work with ABC/Velocities Screen

• Create ABC/Velocity Screen

• Change ABC/Velocity Screen

• Display ABC/Velocity Screen

• Update SKU ABC/Velocity Codes Screen (MABC)

• Print ABC Velocity Report (By Dollars or Units)

Valid ABC/Velocity Codes

Valid ABC/velocity codes are A, B, C, D, etc., N, and Z. Ranking is based on ABC/velocity code, sorted alphanumerically (for example, A is the highest ranking, B is the second highest ranking, etc.).

You can run the ABC/Velocity Process to automatically assign ABC/velocity codes to items/SKUs based on sales performance or you can update the ABC/velocity field in the Item file manually with the appropriate ABC/velocity codes.

ABC code	Description
A	Items in the top percentage of sales. For example, if the Percent of sales is set to 50.00%, ABC/velocity code A represents items in the top 50% of sales.
B	Items in the next top percentage of sales. For example, if the Percent of sales is set to 25.00%, ABC/velocity code B represents items in the next top 25% of sales.
C	Items in the next top percentage of sales. For example, if the Percent of sales is set to 15.00%, ABC/velocity code C represents items in the next top 15% of sales.
D, etc.	Items in the bottom percentage of sales. For example, if the Percent of sales is set to 10.00%, ABC/velocity code D represents items in the bottom 10% of sales.
N	A new item that has no sales history and whose first order date is less than the number of days defined in the First order field for ABC/velocity code N. You must enter a First order date for ABC/velocity code N; this is the number of days that must pass after the first order for an item before the system assigns an ABC/velocity code to the item. For example, if First order is set to 5, the system does not assign an ABC/velocity code to the item until 5 days after the date of its first order. Note: To flag an item as new, you must manually assign the item to ABC/velocity code N; if you create a new item and leave the ABC/velocity code blank, the system will update the item’s ABC/velocity code to Z if the item has no sales history. You cannot enter a Percent of sales for ABC/velocity code N. Items assigned ABC/velocity code N are not included in the sales ranking.
Z	An item that has no sales history, but is not a new item. You cannot enter a Percent of sales for ABC/velocity code Z.

ABC/Velocity Process

The ABC/velocity process automatically assigns ABC/velocity codes to items/SKUs based on sales performance.

• The system uses the Item Warehouse History file to accumulate the Dollars sold, Units sold, Dollars returned, and Units returned for an item/warehouse in a specific accounting period.

• The system uses the Item Sales Analysis Work file to store the accumulated Dollars sold, Units sold, Dollars returned, and Units returned for a specified date range. Based on the accumulated totals in the Item Sales Analysis Work file, the system generates the Print ABC Velocity Report (By Dollars or Units) and updates the ABC/velocity code for each item/SKU.

To submit the ABC/velocity process, press F9 at the Update SKU ABC/Velocity Codes Screen (MABC).

When you submit the ABC/Velocity program, the system:

1. Determines the starting accounting period and year, based on the From date you defined at the Update SKU ABC/Velocity Codes Screen (MABC).

2. Determines the ending accounting period and year, based on the To date you defined at the Update SKU ABC/Velocity Codes Screen (MABC).

3. If you selected to perform the ABC/velocity update, deletes all records from the Item Sales Analysis Work file for the company where you submitted the ABC/Velocity update.

4. If you selected to perform the ABC/velocity update, determines if any items/SKUs currently defined as new (ABC/velocity code N) should be assigned a new ABC/velocity code.

• If the date when the item/SKU was first ordered plus the number of days defined in the First order field for ABC/velocity code N is on or before the ABC/velocity end date specified, the system updates the ABC/velocity code assigned to the item/SKU and includes the item/SKU on the Print ABC Velocity Report (By Dollars or Units). For example, the ABC/velocity date range specified is 02/01 - 02/09. The item’s first order date is 02/04 and the First order field is 5. In this case, 02/04 + 5 = 02/09; the system updates the item’s ABC/velocity code.

• If the date when the item/SKU was first ordered plus the number of days defined in the First order field for ABC/velocity code N is greater than the ABC/velocity end date specified, the system does not update the ABC/velocity code assigned to the item/SKU and does not include the item/SKU on the Print ABC Velocity Report (By Dollars or Units). For example, the ABC/velocity date range specified is 02/01 - 02/09. The item’s first order date is 02/06 and the First order field is 5. In this case, 02/06 + 5 = 02/11; the system does not update the item’s ABC/velocity code. Instead, the item/SKU keeps the ABC/velocity code N assignment and is not included on the Print ABC Velocity Report (By Dollars or Units).

5. If you selected to perform the ABC/velocity update, determines the total number of items/SKUs included in the ABC/Velocity update. This number includes any item/SKU that is assigned an ABC/Velocity code other than N.

6. For each selected item/SKU, looks at the Item Warehouse History file within the defined start accounting Year and Period and end accounting Year and Period to determine:

• The total Dollars returned for an item/SKU within the defined accounting period/year range.

• The total Dollars sold for an item/SKU within the defined accounting period/year range.

• The total Unit returned for an item/SKU within the defined accounting period/year range.

• The total Units sold for an item/SKU within the defined accounting period/year range.

Note: Based on the date range specified, the system may need to determine Dollars returned/sold and Units returned/sold across multiple warehouses and multiple accounting periods/years.

7. For each selected item/SKU, creates a record in the Item Sales Analysis Work file.

• The Dollars returned field contains the total Dollars returned from the Item Warehouse History file for the item/SKU within the defined accounting period/year range.

• The Dollars sold field contains the total Dollars sold from the Item Warehouse History file for the item/SKU within the defined accounting period/year range.

• The Units returned field contains the total Units returned from the Item Warehouse History file for the item/SKU within the defined accounting period/year range.

• The Units sold field contains the total Units sold from the Item Warehouse History file for the item/SKU within the defined accounting period/year range.

8. Determines the rank of each item/SKU in the Item Sales Analysis Work file, based on the method you selected at the Update SKU ABC/Velocity Codes Screen (MABC) to determine the ABC/velocity code assigned to each item.

• If you selected D (dollars), the system ranks each item/SKU based on Dollars sold - Dollars returned. In this case, you want to rank items based on highest to lowest sales dollars.

• If you selected U (units), the system ranks each item/SKU based on Units sold - Units returned. In this case, you want to rank items based on highest to lowest units sold.

Once the rank is determined, the system updates the Item class field in the Item Sales Analysis Work file with the ABC/velocity code assigned to the item/SKU.

Example 1: The system ranks items/SKUs based on sales dollars. The total sales for 8 items is $707.00.

ABC/Velocity code	Percentage of Sales	Results
A	50.00%	Items/SKUs whose cumulative percent of sales is 50% (.01% to 50%). The system adds the cumulative percent of sales for items until 50% is reached or the next item forces the cumulative value to be greater than 50%. Example: Item1 cumulative percent of sales = 22.63%. Item2 cumulative percent of sales = 45.26%
B	25.00%	Items/SKUs whose cumulative percent of sales is the next 25% (50.01% to 75%). The system adds the cumulative percent of sales for items until 75% is reached or the next item forces the cumulative value to be greater than 75%. Example: Item3 cumulative percent of sales = 66.76%.
C	15.00%	Items/SKUs whose cumulative percent of sales is the next 15% (75.01% to 90%). The system adds the cumulative percent of sales for items until 90% is reached or the next item forces the cumulative value to be greater than 90%. Example: Item4 cumulative percent of sales = 88.26%.
D	10.00%	Items/SKUs whose cumulative percent of sales is the next 10% (90.01% to 100%). The system adds the cumulative percent of sales for items until 100% is reached or the next item forces the cumulative value to be greater than 100%. Example: Item5 cumulative percent of sales = 95.47%. Item6 cumulative percent of sales = 100.00%. Note: The system may assign an item whose cumulative percent of sales is 100% an ABC/velocity code, based on rounding. For example, if the cumulative percent of sales for the item is between 99.995% and 99.999%, the cumulative percent of sales is 100%.
N	.00%	Any items/SKUs without sales within the defined number of days from First order date and ABC/velocity program run date. The system does not include new items in the sales ranking.
Z	.00%	Any items/SKUs without sales that are not identified as new items. The system includes these items in the sales ranking.

Note: The system assigns at least 1 item to each ABC/velocity code, even if the item’s percentage of sales is greater than the ABC/velocity code’s percentage of sales.

Example 2: The system ranks items/SKUs based on sales dollars. The total sales for 8 items is $1092.00.

ABC/Velocity code	Percentage of Sales	Percentage of Sales for Item	Results
A	30.00%	43.68%	Items/SKUs whose cumulative percent of sales is 30% (.01% to 30%). The system assigns the first item to ABC/velocity code A, even though its cumulative percentage of sales (43.68%) is greater than 30%.
B	25.00%	59.89%	Items/SKUs whose cumulative percent of sales is the next 25% (30.01% to 55%). The system assigns the second item to ABC/velocity code B, even though its cumulative percentage of sales (59.89%) is greater than 55%.
C	25.00%	75.46%	Items/SKUs whose cumulative percent of sales is the next 25% (55.01% to 80%). The system assigns the third item to ABC/velocity code C since the cumulative percentage of sales (75.46%) is greater than 55% but below 80%.
D	20.00%	90.11%	Items/SKUs whose cumulative percent of sales is the next 20% (80.01% to 100%). The system assigns the fourth item to ABC/velocity code D since the cumulative percentage of sales (90.11%) is greater than 80% but below 100%.
D	20.00%	95.33%	Items/SKUs whose cumulative percent of sales is the next 20% (80.01% to 100%). The system assigns the fourth item to ABC/velocity code D since the cumulative percentage of sales (90.11%) is greater than 80% but below 100%.
D	20.00%	100.00%	Items/SKUs whose cumulative percent of sales is the next 20% (80.01% to 100%). The system assigns the fourth item to ABC/velocity code D since the cumulative percentage of sales (90.11%) is greater than 80% but below 100%. Note: The system may assign an item whose cumulative percent of sales is 100% an ABC/velocity code, based on rounding. For example, if the cumulative percent of sales for the item is between 99.995% and 99.999%, the cumulative percent of sales is 100%.

9. Generates the Print ABC Velocity Report (By Dollars or Units).

10. If you selected to perform the ABC/velocity update, updates the ABC/velocity field for the item/SKU in the SKU file, based on the results in the Item Sales Analysis Work file.

Work with ABC/Velocities Screen

Purpose: Use this screen to create and maintain ABC/velocity codes.

How to display this screen: Enter WABC in the Fast Path field at the top of any menu or select Work with ABC/Velocity Codes from a menu.

INR0303 DISPLAY Work with ABC/Velocities 2/06/04 11:58:56 KAB Company ABC First Percent Opt Code Order of Sales Type options, press Enter. 2=Change 4=Delete 5=Display A 0 40.00 % B 0 30.00 % C 0 20.00 % D 0 10.00 % N 7 .00 % Z 0 .00 % F3=Exit F6=Create F12=Cancel F21=Print list F24=Select company

Field	Description
ABC code	A code that classifies an item based on sales volume. The ABC/velocity code assigned to an item is based on the item’s sales performance. See Valid ABC/Velocity Codes for a list of valid codes. Alphanumeric, 1 position; optional.
First order	The number of days that must pass after the first order for an item before an ABC code is assigned to the item. For example, if First order is set to 5, an item is assigned an ABC code of N (new item) until 5 days after the date of its first order. Numeric, 5 positions; optional.
Percent of sales	The percentage of sales (units or dollars) required for an item to earn the ABC/velocity code. The system ranks percent of sales by ABC/velocity code, sorted alphanumerically. Numeric, 5 positions with a 2-place decimal; optional.

Screen Option	Procedure
Create a new ABC/velocity code	Press F6 to advance to the Create ABC/Velocity Screen.
Change an ABC/velocity code	Enter 2 next to a code to advance to the Change ABC/Velocity Screen.
Delete an ABC/velocity code	Enter 4 next to a code to delete it. Note: You can delete a code even if it is assigned to an item. The next time you maintain the item you will receive a message indicating that the code assigned to the item is not found.
Display an ABC/velocity code	Enter 5 next to a code to advance to the Display ABC/Velocity Screen.

Create ABC/Velocity Screen

Purpose: Use this screen to create an ABC/velocity code.

Note:

• You must enter a number of days in the First order field for ABC/velocity code N or an error message displays: First Order Required.

• You cannot enter a number of days in the First order field for an ABC/velocity code other than N or an error message displays: First Order not allowed for ABC Code.

• You cannot enter a Percentage of sales for ABC/velocity codes N or Z or an error message displays: Percent of sales not allowed for ABC Code.

• After you are done creating all of your ABC/velocity code, make sure the total Percent of sales across all ABC/velocity codes equals 100% or you will not be able to submit the ABC/Velocity Process at the Update SKU ABC/Velocity Codes Screen (MABC).

How to display this screen: Press F6 at the Work with ABC/Velocities Screen.

INR0306 ENTER Create ABC/Velocity 2/06/04 13:04:47 KAB CWData Download Company ABC Code . . . . . . First order . . . . . Percentage of sales . % F3=Exit F12=Cancel

Field	Description
ABC code	A code that classifies an item based on sales volume. The ABC code assigned to an item is based on the item’s performance. See Valid ABC/Velocity Codes for a list of valid codes. Alphanumeric, 1 position. Create screen: required. Change screen: display-only.
First order	The number of days that must pass after the first order for an item that is flagged as ABC/velocity code N (new) before the system assigns another ABC code to the item. For example, if First order is set to 5, an item is assigned an ABC code of N (new item) until 5 days after the date of its first order. You must enter a number of days in the First order field for ABC/velocity code N or an error message displays: First Order Required. You cannot enter a number of days in the First order field for an ABC/velocity code other than N or an error message displays: First Order not allowed for ABC Code. Numeric, 5 positions; required.
Percentage of sales	The percentage of sales (units or dollars) required for an item to earn the ABC code. The system ranks percent of sales by ABC code, sorted alphanumerically. For example, if the Percentage of sales for ABC code A is set at 40, all items assigned ABC/velocity code A are included in the top 40% of sales for the specified accounting period range. You cannot enter a Percentage of sales for ABC/velocity codes N or Z or an error message displays: Percent of sales not allowed for ABC Code. You can run the ABC/Velocity Process to assign ABC codes to items that reach the percentage of sales threshold values defined in this file, or you can update the Item file manually with the appropriate ABC codes. Numeric, 5 positions with a 2 place decimal; required.

Change ABC/Velocity Screen

To change: Enter 2 next to a code at the Work with ABC/Velocities Screen to advance to the Change ABC/ Velocity screen. You can change any information except the ABC/velocity code. See Create ABC/Velocity Screen for field descriptions.

Display ABC/Velocity Screen

To display: Enter 5 next to a code at the Work with ABC/Velocities Screen to advance to the Display ABC/Velocity screen. You cannot change any information on this screen. See Create ABC/Velocity Screen for field descriptions.

Update SKU ABC/Velocity Codes Screen (MABC)

Purpose: Use this screen to run the ABC/Velocity Process to automatically assign ABC/velocity codes to items, based on the item’s sales performance. The system assigns ABC/velocity codes to any item meeting the percentage of sales criteria. If a percentage is not assigned to a code, the system cannot assign that code to any item.

Note: You cannot complete this screen if:

• the ABC codes N and Z do not exist in the ABC/Velocity file.You can create the required code(s) at the Create ABC/Velocity Screen.

• the total ABC velocity is not 100%. Use the Percent of sales field at the Work with ABC/Velocities Screen to make sure the percentage total adds up to 100.

• an accounting period is not set up for the entered dates. Use Working with Accounting Periods (WACP) to set up any required accounting periods.

Pre-bill amount item: If you choose to run this process by units, the Pre Billed Amount Item (J72) might be considered a high velocity item; however, the pre-billed amount item is actually a means to add the pre-billed charges to the order rather than an actual unit of inventory that you sell. See the Pre Billed Amount Item (J72) system control value for a discussion.

How to display this screen: Enter MABC in the Fast path field or select Update SKU/ABC Velocity Codes from a menu.

INR1012 ENTER Update SKU ABC/Velocity codes 2/12/04 15:22:08 KAB Co. From date: . . 1/01/04 From period: 1 4 To date: . . . 2/01/04 To period: 2 4 Use Dollars or Units: D (D or U) Update to be Performed: 2 1. Update w/Report 2. Report Only F3=Exit F9=Accept F12=Cancel

Field	Description
From date	The starting date the system uses to update ABC/velocity codes assigned to items/SKUs based on sales performance. The starting date must be earlier or equal to the current date or an error message displays: Date cannot be later than today’s date. An error message displays if an accounting period is not set up for the dates you define: Error occurred while trying to retrieve Accounting Year/Period Company = 999 and Start date = 040104. Numeric, 6 positions (MMDDYY format); required.
From period	The period and year of the accounting period that contains the starting date you defined in the From date field. The system does not update this field until you press Enter to validate your entries. Accounting period: Numeric, 2 positions; display-only. Accounting year: Numeric, 2 positions; display-only.
To date	The ending date the system uses to update ABC/velocity codes assigned to items/SKUs based on sales performance. The ending date must be earlier or equal to the current date or an error message displays: Date cannot be later than today’s date. An error message displays if an accounting period is not set up for the dates you define: Error occurred while trying to retrieve Accounting Year/Period Company = 999 and Start date = 040104. Numeric, 6 positions (MMDDYY format); required.
To period	The period and year of the accounting period that contains the ending date you defined in the To date field. The system does not update this field until you press Enter to validate your entries. Accounting period: Numeric, 2 positions; display-only. Accounting year: Numeric, 2 positions; display-only.
Use dollars or units	Indicates if the system uses dollars or units to determine the ranking and ABC/velocity code assigned to each item. D = The system uses sales dollars to determine the ranking and ABC/velocity code assigned to the item. U = The system uses sales units to determine the ranking and ABC/velocity code assigned to the item. Alphanumeric, 1 position; required.
Update to be performed	Indicates if the system updates items with the new ABC/velocity code or just generates the Print ABC Velocity Dollars/Units report. 1 = Update the ABC/velocity code assigned to an item based on the item’s performance and generate the Print ABC Velocity Dollars/Units report. 2 = Do not update the ABC/velocity code assigned to an item; just generate the Print ABC Velocity Dollars/Units report. Numeric, 1 position; required.

Screen Option	Procedure
Submit the ABC/Velocity program to perform the ABC/velocity update and/or generate the Print ABC Velocity Report (By Dollars or Units)	Press F9. See ABC/Velocity Process for more information on the updates the system performs.