Pareto Chart for Inventory ABC Analysis — SKU Value Concentration
An inventory ABC Pareto chart ranks SKUs or product families by annual consumption value ($V_i = Demand_i \times UnitCost_i$) and plots cumulative percentage to define A, B, and C stock control tiers.
Tip: Paste Excel or Google Sheets rows (Ctrl+V / ⌘V) directly into any cell.
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Annual Usage Value: AUV_i = AnnualUnits_i * UnitCost_i. Class A: CumValue <= 80%. Class B: 80% < CumValue <= 95%. Class C: CumValue > 95%.
Chart Design & Use-Case Tips
- 01Annual Usage Value: AUV_i = AnnualUnits_i * UnitCost_i. Class A: CumValue <= 80%. Class B: 80% < CumValue <= 95%. Class C: CumValue > 95%.
- 02SKUs to the left of the 80% cumulative line are Class A items requiring tight safety stock, frequent cycle counts, and dual-source supplier agreements.
- 03SKUs between 80% and 95% cumulative value are Class B items; SKUs above 95% are Class C bulk hardware.
- 04Multiply annual unit volume by unit cost before pasting to rank by true financial exposure.
Frequently Asked Questions
What is ABC analysis in supply chain management?+
ABC analysis applies the Pareto principle to inventory: 'A' items (~20% of SKUs) account for ~80% of dollar spend, 'B' items (~30% of SKUs) for ~15%, and 'C' items (~50% of SKUs) for only ~5%.
How should warehouse teams manage Class C items differently from Class A?+
Class A items get daily/weekly cycle counting and automated reorder points, while low-cost Class C items (like bolts or packaging) use simple two-bin kanban bulk replenishment.
Does the Pareto chart sort my SKUs automatically?+
Yes, paste SKUs in any order and the chart automatically ranks them from highest dollar value to lowest.