ABC classification - Cargoflow Support

Overview

ABC classification ranks products by how much leaves the warehouse. The few products that make up most of the outbound volume are A; the next ones, B; and those that barely move, C. The idea is to count what moves most more often, because that is what drifts most.

In the system the classification is used in one place only: the By ABC class scope of cycle counts. It is not stored or shown on any other screen: it is calculated when you generate the plan.

Before you start

Permissions: those needed to create a count plan (Cycle Count and Adjust Inventory).
History: the classification needs shipments closed in the last 90 days. In a new warehouse, everything is C.

How it is calculated

Which products: those with stock above zero in the warehouse at that moment. A product with no stock is not classified (there is nothing to count).
What is measured: the quantity that left through closed shipments in the last 90 days, in base unit. Adjustments, transfers and status changes do not count.
Order: from most to least outbound.
Cut-off: the percentage of the total is accumulated. Each product takes its class from the cumulative percentage before adding it: below 80% it is A; below 95%, B; otherwise C. So the top mover is always A, and the one that crosses the 80% line is also A.
No outbound: any product with stock and no shipments in the window is C. If no product shipped at all, everything is C.

Worked example

In the last 90 days 1,000 units shipped, split like this:

SKU	Outbound	Cumulative before	Class
`CN-ACE-1L`	600	0%	A
`DV-JAR-750`	250	60%	A
`MP-GEL-500`	100	85%	B
`AC-TOR-12`	40	95%	C
`SL-VAS-12`	10	99%	C
`IE-CAF-250`	0 (with stock)	—	C

A “By ABC class” plan for class A creates tasks for every line of CN-ACE-1L and DV-JAR-750.

Using it in a count plan

Inventory › Cycle counts › New count plan.
Scope: By ABC class.
ABC class: A (fast movers), B or C (slow movers).
Complete the rest of the plan and generate it. The message says how many tasks were created.

Special cases and limits

Mixed units: the sum is in base unit. A product shipped in pieces by the thousands outweighs one shipped in a few pallets, even if the pallets are worth more or take more space.
The whole warehouse together: it is classified with every customer’s outbound; there is no per-customer classification.
It changes on its own: the window moves every day. The same product can be A today and B next month.
No preview: there is no screen to see which products are in each class before generating the plan.
Cross-dock outbound: it counts if it left on a closed shipment.

Best practices

A reference frequency: class A monthly, B quarterly and C twice a year. Adapt it to your operation.
If class A creates too many tasks for one day, combine: count class A one zone at a time using zone plans.
Name plans with the class and date (“Class A, September”) to see the rhythm in the list.

Troubleshooting

A class A plan came out with zero tasks.

No shipments closed in the last 90 days: everything is C. Use a zone or all on-hand plan.

A product that ships a lot ended up in C.

Its outbound is small in base units compared with other products, or it shipped more than 90 days ago.
If it has no stock today, it goes into no class plan.

I generated a plan just to see what came out and now it stays Active.

Plans cannot be cancelled. Reject its tasks after recording a count, or leave it; it does not affect stock.

Frequently asked questions

Where do I see a product’s class?

On no screen. The class only exists when a plan by ABC class is generated; the resulting plan is the list of what fell into that class.

Is the classification per customer?

No. It covers the whole active warehouse, with every customer’s outbound together.