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🔤 Understanding and defining ABC classes
🔤 Understanding and defining ABC classes
This article describes how to set ABC class parameters to define priorities
Stephane Leclercq avatar
Written by Stephane Leclercq
Updated over a week ago

When calculating your forecasts, SKU Science also computes each article's weight (percentage) compared to all the elements available on the platform. This method is an application of the Pareto principle according to which 80% of turnover is achieved with 20% of products.

Each article is compared to the others, receives an associated percentage, and is given a class A, B, or C according to its weight. The A products are the most important, the B comes next, and finally, the C items are normally the least representative of your business.

The objective is to focus on articles A and B as a priority, and not to spend too much time on articles C.

SKU Science allows you to configure the calculation of the ABC class.

This calculation follows certain rules that can be defined in the "Class ABC" tab.

You will understand how to modify this ABC classification by reading this article, depending on your focus: quantities, revenue, cost, margin.

To access the definition of the ABC class, all you have to do is click on the gear icon, then select Rules.

Then, you access this interface.

Quantity used to compute ABC classes (units, price, cost or profit)

This list allows you to choose between 4 options.

  • Units (default choice)

  • Cost

  • Price (Revenue)

  • Profit

By default, the calculation is based on units, but if you have taken the time to fill in the financial information of your items, it is a better option to select "Price" to reflect the financial weight of each item in your turnover.

Use demand history or demand forecast

Then you can decide to calculate the percentage based on historical data or based on forecast. By default, the calculation is made on the historical demand.

Number of periods used to compute ABC classes (n last periods if history, n next period if forecast)

Here you decide how many periods to consider for the calculation.

Class A limit %

By default, it is set to 75%.

This value means that all the most important items by weight, up to a total of 75% of the classification method used, will be in class A.

Classes A and B limit %

By default, it is set to 90%

This value means that all articles located from 75% to 90% will be in class B.

By clicking on Save ,you save your settings, and a new calculation of the ABC classes is launched.

Once the calculation is complete, click on the Home tab to view the priority table.

Then simply click on the part of the matrix for a given combination of classes, to automatically get a view of these items. The top row represents the A class, the middle row the B class, the bottom row the C class.

Do not hesitate to contact us to ask your questions directly in the tool interface, using the messenger at the bottom right of the screen.

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