Grading Inventory - ABC Analysis

started a topic over 1 year ago

I've recently become very interested in a type of inventory report called an ABC analysis. Based on the Pareto principle or 80/20 rule, it helps you to grade your inventory according to how each item contributes to overall revenue in a given time.

Dear has a lot to say about ABC analysis for inventory through articles on their blog, how important it is to grade products in such a way and pitching their cloud-based Inventory software as the solution.

Dear appears to be an authority on this topic, yet I can't find any resources that guide me to follow through and do it myself. Nor do I see any reports available to help me do this. 

Shopify has recently introduced these reports for online sales, (Shopify users can find it at /admin/reports/abc_analysis_by_product), but I would rather get this report from Dear, so that I can factor in all sales channels (not just online). The key thing I want from this exercise is to be able to grade our inventory items by how much they contributed to overall revenue in a given time, ultimately knowing:

  • Which products are A grade - accounting for 80% of our revenue
  • Which products are B grade - accounting for 15% of our revenue
  • Which products are C grade - accounting for 5% of our revenue

Please could Dear provide a tutorial on how to achieve this and if any of you know how to do this,  please could you share your method - I'm sure many business owners would appreciate a report such as this.

Thanks in advance :)

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