To manage a maze of inventory more efficiently, businesses need to prioritize items that are most essential to its success. An ABC analysis is a technique you can use to identify your best and worst performing inventory over a certain period or even a season. It gives businesses greater inventory control and helps reduce costs.
You’ve probably heard of the ’80/20 rule’ (also known as the Pareto Principle). This rule also applies to inventory management, where 80% of a company’s annual sales value comes from 20% of its items!
To put simply, we group the inventory into three buckets.
But do auto-dealers have a clarity on the pattern of product sales? Or are they aware if a certain product was sold more during a particular season? How do inventory stakeholders know which product is completely obsolete this year?
Well, the good news is, for legacy systems like Autoline system (and other popular ERPs) does have a “re-ordering category” that categorizes the inventory based on the volume of sales made. However, the system is fairly accurate, rigid and ignores seasonality. The analysis must be dynamic and take into consideration seasonality for the previous 365 days to help stock the right supplies in the inventory. Inventory managers and business users can utilize our dynamic matrix to evaluate product performance, market demand, consumption trends, avoid stocking up on rarely used products, and make well-informed decisions using the past 365 days’ worth of data.
With a right solution in hand, auto retailers can refine operational processes in inventory management which ultimately helps businesses control their costs, avoid obsolete inventory thus improving their inventory turnover rate!
We at NRoot Labs, specialize in comprehensive BI solutions. As a technology-neutral company, our team of BI consultants excels in delivering business solutions that leverage actionable insights supported by business data. Our commitment to understanding the complexities of business processes enables us to provide enhanced BI solutions for our clients.