In order to understand why ABC XYZ analysis is needed , you first need to know: what is it? To begin with, it is worth noting that these two analyzes are used in various business structures, for example, such as restaurants, shopping centers, alcohol companies, etc.
These two computing assistants help identify problem areas of the enterprise, plan actions, raise the value of the goods that are in demand on time, and protect the company from future errors. So what is ABC XYZ analysis ?
ABC analysis is the process of classifying goods and resources of an enterprise into groups according to their significance level. This analysis uses the well-known Pareto principle. The principle is based on the axiom: 20% of the total product gives 80% of the turnover. In particular, this rule can be applied to ABC analysis as follows: quality control of 20% of the enterprise’s resources, brings 80% of the control of the entire system, in general, it can be products, equipment, raw materials, etc. What is needed and how is this analysis method used ?
Suppose an ABC analysis is most often used in a restaurant or fast-food cafe, it is needed in order to “put everything on the shelves” and determine the share of goods in the turnover of the enterprise and calculate the percentage of the share of goods in the profit of the restaurant. A special table is displayed, in which it is necessary to enter: the number of product sales per month (six months, a year), the cost of goods and the selling price. Using a specific formula, it is necessary to order goods on a scale from min to max. Then, using this formula, determine the share of the goods in circulation and the percentage of the share of the goods in the profits of the enterprise. After that, the table will give us the data of each product and the scale of their importance for turnover and participation in profits. The scale is called “Increasing total”, it is built from 1 to 100. If the assortment group on this scale falls into the interval from 1 to 50, then this is group A, if in the interval from 50-80, then the product is in group B, but in the group C is in the range of products ranging from 80 to 100. The goods that ended up in group A and B have a large turnover and bring a good percentage of profit to the enterprise, but the categories that ended up in group C should be worked on and the demand raised and turnover, or withdraw them from sale. According to statistics, the categories that are in group C for more than six months are eliminated.
XYZ analysis is a stock classification. Predicts consumption, the nature of changes and stock requirements. A certain algorithm of analysis is being built, including the calculation of the coefficient of variation, grouping from min to max, distribution among XYZ groups, and the image is the result of the graph.
Most often, this method is used in large enterprises, where there are warehouses and a logistics center, which conducts XYZ assortment analysis, explores, evaluates the logistics and customers of the company.
What is included in the groups X , Y , Z ?
Group X includes the main stock items with a coefficient of variation of the statistical shipping sequences of 25%. These are resources that are consistent with a stable value of consumption, require an accurate forecast in consumption.
Group Y contains the same nomenclature items with a coefficient of variation and has a statistical series of shipments of 25-50%. In this group of resources, it is necessary to determine the need for them, these may be seasonal products (beer, water).
Group Z carries reserves of a statistical series with more than 50%. This group is characterized by irregular resource consumption and inaccurate forecasting. If you combine ABC XYZ analysis, it will show a more accurate table of consumption rates and rates of shipment.
Analysis ABC XYZ works best in pairs, for a more accurate assessment of enterprise performance. This is the most powerful internal weapon of the company, setting it at the basis of business management priorities , you can identify key points, save important resources of the enterprise and capture the lion's share of the market.