ABC/XYZ inventory classification
ABC analysis ranks items by value; XYZ analysis ranks them by demand variability. Together they set planning focus, but for MRO they are not enough on their own.
ABC analysis: ranking by value
ABC analysis sorts items by annual consumption value (annual usage × unit cost) and groups them:
A items:
The small number of items that make up most of the value, commonly around 70 to 80%.
B items:
A middle group, commonly around 15 to 25% of value.
C items:
The large number of low-value items that make up the rest.
How to do an ABC analysis
1
Calculate annual consumption value for each item.
2
Sort from highest to lowest.
3
Calculate the cumulative percentage of total value.
4
Assign A, B and C using your chosen cut-offs.
The basic formula
Sort from highest to lowest.
| X: stable | Y: variable | Z: irregular | |
|---|---|---|---|
|
A: high value |
Plan tightly, low buffers |
Plan closely, review often |
Manage individually |
|
B: medium value |
Automate replenishment |
Standard policies |
Review periodically |
|
C: low value |
Automate, generous buffers |
Automate |
Simple rules or no stock |
Why criticality matters too
ABC ranks by consumption value. A cheap seal that stops a plant matters more than its value suggests, and an expensive part with a reliable local supplier may matter less. For MRO, combine value and variability with criticality and supply risk. Many critical spares are C items with Z demand, and a pure ABC/XYZ approach would give them the least attention.
How StoXeo applies it
StoXeo groups items by value, demand pattern, criticality and supply risk, so each group gets suitable policies and review routines.