2 min read Knowing your best-selling products is just part of the story. To truly understand your inventory, you also need to identify which products are slowing you down. That is where ABC analysis comes in.
ABC analysis is a simple way to categorize your inventory based on how much each product contributes to your revenue or sales movement. This method divides products into three groups:
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A-products are the top 20 percent of SKUs that generate about 80 percent of your revenue. These items sell fast and should always be kept in stock to meet demand.
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B-products are steady sellers that keep your operations balanced without taking up too much space.
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C-products move slowly, tie up your cash flow, and take up valuable warehouse space.
Every warehouse has limits on space, time, and workforce. The hidden cost of holding too much slow-moving inventory is not just the space it takes up. It is also the cash that is tied up in products that are not generating revenue. This money could be better spent reordering your best sellers, upgrading your equipment, or growing your business.
By aligning your purchasing decisions with how your products actually perform, you stop overbuying items that sit on shelves. Instead, you focus on stocking what sells. This approach helps expand your profit margins without adding extra effort.
When your inventory is balanced correctly, your warehouse operations run more smoothly. Your team can focus on the products that really move the needle, increasing overall efficiency.
In short, ABC analysis helps you turn raw inventory data into smart decisions that drive profitability and keep your warehouse running at peak performance.
Ready to improve your inventory management?
Schedule a free walkthrough with our team and discover how SKULabs can help you optimize your warehouse for better efficiency and growth.
