Run the Determine ABC code process to perform an ABC analysis for your parts, to ensure the correct ABC codes are assigned to the parts in the ABC code field on the General tab of the Parts form.
ABC codes allow you to organize parts, usually by order of turnover and stock transactions. ABC codes can also be used to control processes, such as stock counts. For example, you might count 'A' type parts once a month, 'B' type parts once every three months, and 'C' type parts once a year.
ABC codes are determined based on stock transactions. Stock transactions have three aspects:
Quantity
Value
Margin
Usually, the calculation basis is the value of the stock transactions. It is also possible to have the ABC code determined solely based on quantity. The margin-based determination of the ABC code is more relevant to sales and/or service parts, and can be used, for example, to determine your product range. In this context, the margin is the difference between the sales price and the cost price of the part. If the margin is negative, the figure used in the calculation is '0', and the part will, by definition, be assigned the last code (usually C or D).
The period and the weighting are related items. For the period, enter the number of months in the past to be considered. If you set the period to '6', the previous six months will be checked.
Use the weighting to indicate whether all months should weigh as much as each other. To get a more current view of the stock transactions, it may be useful to let more recent months weigh more than older months. You may want to do so, for example, for relatively new parts that have only recently taken off. The weighting functionality works as follows:
Number of months * Weighting factor = Calculated weighting
If you want all months to have equal weight, set the factor to '0'.
Example
Period: 6 months
Weighting factor: 0.5
Calculation: 6 * 0.5 = 3 (The last month weighs three times as much as the first month.)
Period
Weighting
1
1
2
1.4
3
1.8
4
2.2
5
2.6
6
3
= Calculated weighting
Example
You choose which parts are to be taken into account: purchase parts, production parts, or only parts with the 'In stock' order code. You also select whether parts with the 'Floor stock' issue sequence are to be excluded from the calculation.
You want the 'Value' calculation basis to be used to determine the ABC code. Select the appropriate option on the Determine ABC code form.
You want all months to have equal weight, so set the weighting factor to '0'.
Define the bands (for example, A parts < 80%, B parts < 95%, C parts < 100%) to be used when assigning the ABC codes.
The cumulative value of a part is determined by adding up the values of all issues and deliveries made within a particular period (provided both are selected on the processing form).
Isah assigns a percentage to the parts, which is determined by dividing the cumulative value of each part by the total of the cumulative values (of all of your parts).
For each part, Isah calculates a cumulative percentage by sorting the parts by percentage, and then adding up the percentages.
Isah groups the parts by the percentages you have specified.
Calculation basis