In inventory management, ABC Analysis is a method used to group inventory items according to their significance, which is frequentlydetermined by value or usage frequency. The most valuable items are usually classified into three categories: “A” items are the most valuable and usually make up a small percentage of the total items but a large portion of the value; “B” items are of moderate value and volume; and “C” items are the least valuable, frequently numerous but contributing less to the total value. Supply chain managers can automate or streamline processes for C items while prioritizing resources and efforts for A items, such as stricter control and frequent reordering.
