What is the difference between abc analysis and xyz analysis

On the other hand, on Article 2, you have very high volatility and therefore you will need to put more inventory to cover this risk see below. This is the whole point of the ABC XYZ analysis, on the one hand you will classify by volume with the ABC analysis and on the other hand you will classify by uncertainty with an XYZ analysis and therefore this method is very useful in inventory management to identify products at risk, whether it is risks of shortage or overstocks to define the right inventory coverage and the right safety stock.

Finally, it is widely used in the industry to optimize production volumes based on volumes and uncertainty. It is the fact of not predicting demand, and not predicting product sales. It is often characterized by instability in sales. Several types of products: very stable and very predictable products X.

Then you have less stable but still quite predictable products Y. Finally, you have the products and which are completely unstable and totally unpredictable products Z. Each product is then identified as:. First, you need to mix your historical data with your forecasts, for example, 6 months of historical data and 6 months of forecasts. I also advise you to think in terms of value rather than quantity. I certify that I am a full-time student at an accredited college or university.

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Learn More. Global Network. ASCM Newsroom. Certificate Programs Warehousing Procurement. Events Annual Conference. SCM Now Magazine. ASCM Blog. Instructor Development Program Program Resources. The values can be determined for example on the basis the portions of the annual turnover, at the camp value or purchase value. In logistics an ABC analysis orients itself frequently also at the inventory turnover ratio.

In logistics, the ABC analysis is often used to control the stocks or to determine the inventory value. Some products are more important than others and must be treated as such. For example, you can separate the items in stock according to criteria such as product sales, sales ratio, profit margin or inventory cost.

XYZ analysis can be used to plan material requirements and inventory levels so that waste, production delays, or excessive inventory levels can be avoided.

IXYZ analysis evaluates the ability to plan consumption and demand. With the ABC analysis the individual articles are judged according to their portion high value, middle value, small value of the enterprise conversion. With the XYZ analysis the sales of durable articles, season articles and special offers can be prognosticated. Combining ABC and XYZ analyses into an automated process gives companies a much more comprehensive view of their goods and customers' needs. In the material management this analysis is therefore one of the most important aids for a lasting inventory optimization.

By the method a still more differentiated picture of the structure of the assortment of an enterprise results. The entire assortment can thus be tailored more specifically to the needs of the market. Even articles with unforeseen sales can be quickly identified with the help of the precise sales analysis and taken into account at short notice. The combination of both methods is an effective rationalization tool.

You perform an ABC analysis to classify planning objects according to their usage value, or number of objects. During ABC analysis, the system assigns each object one of the following indicators:. A - The most value, or given number of objects that produce the greatest value. C - The least value, or given number of objects that produce the least value. You perform an XYZ analysis to classify planning objects according to the variance in a specific coefficient.