Supply Chain Glossary

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ABC Analysis


Source: Procurement Glossary
Author: Paul Rogers
Institute: CIPS - UK

Courtesy of


 

An approach to classifying inventory or spend based on the Pareto Principle.  Whereas the ‘80/20 rule’ separates spend into two categories, ABC analysis adopts a threefold classification, with A class categories typically representing 70% of the value, B class categories representing 20% and, C class categories representing the large tail of low value categories.  See also Pareto Principle.

 

 




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