ABC analysis
ABC analysis allows you to check the price structure in detail, form a rating of the products presented in the assortment, and identify the part that brings the lion's share of profit. This telegram in the philippines method is based on the Pareto principle, according to which 80% of the income comes from only 20% of the goods. In essence, the method comes down to determining what is included in these 20%.
The range is segmented into several categories:
A - the most valuable.
B – average value.
C – minimum value.
Segment “A” provides the main profit, therefore, it requires special attention, careful daily planning, and accounting for the movement of goods.
Segment "B" is the largest in volume. It requires monthly planning, as well as periodic accounting and control.
Segment "C" includes product items that bring in the least amount of income and do not affect the overall sustainability of the company. They can be excluded or simpler planning methods can be used for them. Control can be performed no more than once a quarter.
Data for ABC analysis
The object of analysis is both a separate product and a product category. The subject of the study is the sales volume, number of transactions, profit. As a result, the seller gets a picture from which it is clear which items bring the main profit, and in which the main part of losses is concentrated.
In order for the conclusions to be relevant, it is necessary to use a large array of data, which can be obtained from an automated accounting system.
The ABC method has a significant drawback: the risk of incorrectly assessing the role of sales of a particular product in total revenue. This is not least due to the fact that seasonal changes in demand are not taken into account. For more accurate results, this method must be combined with other analysis tools, otherwise the conclusions will not be reliable enough.