Why ABC and XYZ analysis is needed

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Why conduct ABC and XYZ analysis? It's simple. The resulting information will be very useful for business. Some entrepreneurs sometimes invest money in the wrong product, often waste time on unpromising clients, and as a result - loss of profit and, possibly, even bankruptcy.


To choose the right business development strategy, focus on in-demand products, and identify promising customers, you need to do some work. And even though ABC and XYZ analysis methods are not a panacea for all possible failures and troubles, they can set a business owner on the right path.


This method allows you to objectively fronk oil email list evaluate the company's product range. Having conducted a comprehensive analysis of product positions, it is easy to identify both the most popular and the most expensive for your budget. Based on the results, a plan for the production and promotion of goods is drawn up depending on their value for the company.

ABC and XYZ analysis data allow you to correctly classify product items, divide them into groups and identify the most profitable names. These actions are necessary for the priority promotion of individual products and adjustment of the sales strategy.

Why ABC and XYZ analysis is needed

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So what is the complex method of ABC and XYZ analysis? Let us stipulate right away that these tools are used together. This allows not only to compare sales volumes and profit levels, but also to predict how much demand will change in the future. This allows you to take into account the features of the product and create an optimal strategy for its implementation.

Within the first component of the analysis — ABC — the grouping of goods is carried out based on the absolute values ​​of the selected indicator. The volume of income, profit or other parameters can be selected as a base. The result of the analysis is the division of objects into three categories according to their importance for the business. Within the XYZ component, the grouping occurs depending on the magnitude of the deviation from the average values.

The comparison indicator is selected in accordance with current business goals. If the task is to narrow the range, group products by profitability and sales volume. If you are assessing profitability, use payback indicators or asset turnover rate as a basis.