ABC Classification

ABC classification is a method of categorizing products based on their importance to your business. StockWise automatically classifies your products to help you prioritize inventory management efforts.

What Is ABC Classification?

ABC analysis divides products into three categories based on their contribution to total sales:

Class	Description	Typical Percentage
A	High-value, critical items	Top 20% of sales
B	Moderate importance	Next 30% of sales
C	Lower priority items	Remaining 50% of sales

The Pareto Principle

ABC classification is based on the Pareto principle (80/20 rule):

Roughly 20% of products generate 80% of revenue
These are your "A" class items

How StockWise Calculates Classes

Class A Products

Products that collectively contribute to the top portion of your sales revenue.

Characteristics:

Highest sales volume or value
Most impact on revenue
Critical to business success

Management approach:

Monitor frequently (daily if possible)
Maintain higher safety stock
Prioritize accurate forecasting

Class B Products

Products with moderate contribution to sales.

Characteristics:

Steady, reliable sellers
Important but not critical
Moderate impact on revenue

Management approach:

Regular monitoring (weekly)
Standard safety stock levels
Normal forecasting priority

Class C Products

Products with lower individual contribution but often numerous.

Characteristics:

Low individual sales
Large number of items
Lower revenue impact

Management approach:

Less frequent monitoring
Lower safety stock acceptable
Simplified forecasting

Using ABC Classification in StockWise

Dashboard View

Each variant displays its ABC class as a badge:

A: High priority indicator
B: Medium priority
C: Lower priority

Filtering

Filter your inventory view by ABC class to focus on:

Critical items needing attention
Specific priority groups
Different management strategies

Alert Prioritization

Consider setting up notifications that prioritize A-class items or alert on different schedules based on class.

Practical Applications

Inventory Investment

Class	Stock Investment Strategy
A	Higher investment justified
B	Balanced approach
C	Minimize tied-up capital

Ordering Frequency

Class	Ordering Approach
A	Frequent, smaller orders
B	Regular cycle ordering
C	Bulk orders, less frequent

Accuracy Tolerance

Class	Forecast Accuracy Importance
A	Critical—invest in accuracy
B	Important—monitor regularly
C	Less critical—acceptable variance

Limitations

Dynamic Classification

Product importance can change:

Seasonal variations
New product launches
Changing customer preferences

StockWise recalculates classifications periodically.

Revenue vs. Volume

Classification is based on revenue contribution. A high-volume, low-margin item might be Class B or C despite selling frequently.

Strategic Products

Some products may be strategically important beyond their revenue:

Loss leaders
Complementary products
New market entries

Consider business context alongside ABC class.

Best Practices

Focus on A Items

Review A-class items daily
Maintain accurate inventory counts
Keep higher safety stock

Don't Ignore C Items

C items still contribute to sales
Customer may need these products
Balance effort, don't eliminate attention

Review Classification Periodically

Sales patterns change
New products enter the mix
Reassess quarterly