You can get the most out of your inventory investments by reviewing and optimizing your stock holdings at the end of the year to find hidden value and make plans for the next year.
ABC analysis for better understanding of what products sell.
AY Top 80% of Sales value generating items , 20-50% fluctuation
AZ Top 80% of Sales value generating items , more than 50% fluctuation
BX Remaining 15% of sales generating items , Less than 20% fluctuation
BY Remaining 15% of sales generating items , 20-50% fluctuation
BZ Remaining 15% of sales generating items , more than 50% fluctuation
CX Bottom of 5% of sales generating items , Less than 20% fluctuation
CY Bottom of 5% of sales generating items , 20-50% fluctuation
CZ Bottom of 5% of sales generating items , more than 50% fluctuation
Inventory segmentation, aka ABC inventory analysis, is the process of grouping inventory items based on certain criteria, such as sales volume, turnover rate, or profitability. By segmenting inventory, a business can identify which items are the most important to keep in stock and which ones may not be necessary to hold.
Once stock is segmented, a business can determine their optimal inventory hold, which is the amount of stock that should be kept on hand to meet customer demand while minimizing unnecessary costs. This can be done through various inventory management techniques such as Economic Order Quantity (EOQ) or ABC analysis.
After the optimal inventory hold is determined, it is important to compare it with the current stock holding. This will help identify which stock items need to be culled, or removed from inventory, to align with the optimal inventory hold. This process can help a business reduce unnecessary costs and improve efficiency.
Free limited pilot
Running an stock optimization pilot could lower inventory expenses and boost customer satisfaction. An inventory optimization pilot can help a company make better purchasing decisions by identifying popular and unpopular products using modern algorithms and data analysis. By maintaining the right stock, a company can avoid stockouts and overstocking, which can cost sales and resources. A pilot lets a corporation test optimization methods and make improvements before deploying them on a bigger scale.
Pricing model
Fixed costs
Customers pay a one-time, fixed price for a product or service under the upfront fixed cost pricing model. Before providing the goods or service, this fee usually covers all charges. If the product or service’s cost is known and the consumer is willing to pay a fixed price, this pricing model can be employed.
Risk or Reward
Customers pay based on the product or service’s outcome in the risk and reward pricing model. The customer only pays if they’re happy or if specific requirements are met. When the price is uncertain and the buyer is willing to take a risk, this pricing approach might be used. This pricing method can help when the product or service is complicated or the buyer is unsure about their needs.
Data preparation
There will be dirty data that will need to be cleaned. This will be done in the initial free limited pilot.
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To learn more about ABC analysis – play this YouTube