The "ABC" method provides a strategic way to evaluate and categorize items based on the value of those products. A common challenge to effectively manage inventory in any system is standardizing processes. By classifying SKUs into three categories based on their significance, value and turnover as follow:

“Class A” accounts for the most vital SKUs, typically by sales volume or profitability

“Class B” for less trafficked or moderately valued parts

“Class C” for slow-churn or low value products

Application of the ABC categories can help create the strategy for inventory management particularly around cycle count frequency. For example, cycle counts for Class C inventory SKUs would likely be scheduled less frequently as these items are less likely to materially impact company profitability.

It is important to note, however, that class assignment can be impacted by the valuation approach, specifically whether indirect costs are applied, but the benefits of this model remain. Learn more about how this simple ABC mindset can provide a more targeted focus around inventory controls.

To learn more, watch this video or schedule an introductory call with RCP using this link: https://calendly.com/rapidcloudpartners/introductory-call