ABC Analysis
Not every SKU deserves the same attention. Rank your catalog by annual usage value and this splits it into A, B, and C classes — the Pareto view that shows where your money and movement really are, so you can count the A items often and leave the long tail alone.
Your SKUs
Enter annual usage and unit cost per SKU — value = units × cost. Paste straight from a spreadsheet, import a CSV, or type them in.
A = the top SKUs up to the A cutoff of cumulative value; B = up to the B cutoff; C = everything after. The classic split is 80 / 95.
| # | SKU | Annual value | % of value | Cumulative | Class |
|---|
What ABC analysis does
ABC analysis applies the Pareto principle to inventory: a small share of your SKUs drives most of the value. Rank items by annual usage value — annual units multiplied by unit cost — and a pattern almost always appears. Roughly the top 20% of SKUs (your A items) account for around 80% of the value; the next band (B) fills in the middle; and a long tail (C) makes up the rest of the SKUs but only a sliver of the value.
Why it matters
The class tells you how hard to work each item. A items justify tight control, frequent cycle counts, and careful reorder points — a stockout or a counting error there is expensive. C items rarely repay that effort; larger order quantities and an annual count are usually enough. Grading your catalog this way keeps your attention, your counting labor, and your working capital pointed at the items that actually move the number.
Value = annual units × unit cost. Classes are assigned by cumulative value share, so the SKU that tips the running total past a cutoff lands in the higher class.