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Degree project:
Categorising articles with ABC Classification

By far the easiest thing in a perfect world would be to control all articles in the inventory in the same way. However, this presents a risk that the company’s resources will not be used optimally. Differentiated control aims to prioritise the right things at the right time. 

The student chose to study IV Produkt in this degree project as it is a growing medium-sized company in the manufacturing industry. IV Produkt was a good subject for this study as, at the time of writing the degree project, they did not fully utilise the classification of all component articles. A common problem when a company’s turnover increases is that the inventory needs more space than it normally has access to. There are a number of proven categorisation models used for subdividing articles, including the ABC analysis.

Through discussions, a literature search and proprietary ABC classification, the study has reflected on whether classification can be useful for IV Produkt. ABC classification with dual criteria can be an initial step to start developing and using differentiated control. The project was developed to review a specific range and how it could be classified to affect the warehouse floor space. After implementation of the report, an ABC analysis can mean more than that. Finding optimal solutions for significant articles and proactively focusing on what matters by negotiating, planning and structuring according to an ABC analysis provides an additional tool in the toolbox to ultimately ensure that the articles are in place on time with the right price, quality and quantity.

The results of the study show how the articles can be categorised according to the ABC analysis and from here purchasers can develop different control methods for different categories in order to achieve optimal results and free up time for added-value proactive work. Accordingly, classification can affect the purchaser’s choice of consignment size and stock levels, but also the choice of supplier. Having a greater understanding and awareness of their range allows purchasers to promote and work with articles that make a difference for the company. Seeing the big picture and the importance of one’s choice of control method is something every purchaser must actively pursue.

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