# What is the ABC XYZ analysis for?

In order to understand what the ABC analysis is forXYZ first need to know: what is it? First of all, it should be noted that these two analyzes are used in various business structures, for example, such as restaurants, shopping centers, alcohol companies, etc.

These two computational assistants helpidentify problem areas of the enterprise, plan actions, timely raise the cost of the goods that are in demand, and protect the company from future mistakes. So, what is ABC XYZ analysis?

ABC analysis is the process of classifyinggoods and resources of the enterprise into groups, in terms of their significance. This analysis uses the well-known Pareto principle. At the heart of this principle is the axiom: 20% of the total product gives 80% of the turnover. In particular, this rule can be applied to the ABC analysis as follows: quality control of 20% of the company's resources, brings 80% of the control of the entire system, in general, it can be products, equipment, raw materials, etc. What is needed and how is this method of analysis used ?

Suppose in a restaurant or cafe fast foodABC analysis is most often used, it is needed in order to "lay out everything in shelves" and determine the share of goods in the turnover of the enterprise and calculate the percentage of the share of the goods in the profits of the restaurant. A special table is displayed, in which it is necessary to enter: the quantity of product sales per month (six months, a year), the cost of goods and the selling price. Using a certain formula, you need to order the goods on a scale from min to max. Then, using this formula, determine the share of the goods in circulation and the percentage of the share of the goods in the profit of the enterprise. After that, the table will give us the data of each product and a scale of their importance in terms of turnover and profit sharing. The scale is called "Increasing total", it is built from 1 to 100. If the assortment group on this scale falls in the interval from 1 to 50, then this is group A, if in the interval from 50-80, then the goods in group B, well in group C products are located in the range from 80 to 100. The goods that are in the group A and B have a large turnover and bring the company a good percentage of profits, but those categories that are in group C, they should be worked on, raise the demand and turnover, or withdraw them from sale. According to statistics, the categories that are in group C for more than six months are eliminated.

The XYZ analysis is the classification of stocks. Forecasts consumption, the nature of changes and the needs of stocks. A certain algorithm of analysis is built up, including calculation of the coefficient of variation, grouping from min to max, distribution by groups XYZ, image result on the graph.

Most often this method is applied to largeenterprises, where there are warehouses and a logistics center, which conducts XYZ assortment analysis, examines, evaluates the logistics and customers of the company.

What's in the groups X, Y, Z?

Group X consists of the main stock items withcoefficient of variation of statistical sequences of shipments - 25%. These are resources that are consistent with a stable consumption value, require an accurate forecast at the expense.

In group Y there are the same nomenclature positionswith a coefficient of variation and have a statistical range of shipments of 25-50%. In this group of resources it is necessary to determine the need for them, these can be seasonal products (beer, water).

Group Z bears the stocks of the statistical serieswith more than 50%. This group is characterized by irregular consumption of resources and inaccurate forecasting. If you combine ABC XYZ analysis, it will show a more accurate table of consumption rate and rate of shipment.

ABC XYZ analysis works best in pairs, formore accurate assessment of the effectiveness of the enterprise. This is the most powerful internal weapon of the firm, setting it at the heart of business management priorities, you can identify key points, save important company resources and capture the lion's share of the market.

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