1. Implementing Manufacturing and Supply Chain Materials Management
  2. ABC Classes

ABC Classes

You use ABC classes to identify the value groupings to which items belong.

You can define these classes using your own terminology. For example, you can define classes High, Medium, Low, and later assign items of highest rank to High, those of lower rank to Medium, and those of the lowest rank to Low.

Typically, ABC refers to the ranking you assign your items in the order of their estimated importance suggesting that the inventories of an organization aren't of equal value, such as:

  • A items are very important for an organization and are very tightly controlled and accurate records are maintained.

  • B items are important, but less important than A items and more important than C items and are less tightly controlled and good records are maintained.

  • C items are marginally important with the simplest controls possible and minimal records are maintained.

You can use ABC classes to group items for a cycle count where you count A items more frequently than B items. When you use ABC classes in this way, you perform an ABC analysis and assign items to classes based on the results of that analysis.