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Abc xyz analysis allows to save money

As is known, trading requires the purchase of goods with its subsequent implementation. Trade will be successful, if you can advance supply of those products which will be in demand, and not spend a lot of money on a product, the relevance of which will soon fall. Done properly, stock of items can bring you a good income and compensate for the trouble delivered uncertainty of trading business, and xyz analysis allows you to analyse your sales and make conclusions about the predictability or unpredictability of demand for a particular commodity. It is much easier to buy goods are always in demand, and not spend a larger portion of the budget to the product that is in demand today and tomorrow, it will lose its relevance. So, what's good xyz analysis as it interacts with the abc analysis and could spend it at home with the help of Microsoft Office Excel?

What is xyz analysis?

 XYZ analysis is necessary for increase of the profit

Unlike analysis abc xyz analysis divides the complete assortment groups, characterized by the predictability of demand for goods. In fact, the abc analysis allows us to know which product brings the greatest revenue (or best of all sold)and xyz shows uniformity of demand for products.

How to conduct a full xyz analysis? First you need to make a complete list of goods, implementation of which you are doing, and gather information (that is to ascertain the volume of sales). All collected data are entered in the plate, and by using standard features of Microsoft Office Excel for each of the goods is the coefficient of variation (formulas are given below). Here's the list of goods is sorted in ascending order of the coefficients of variation and is divided into three categories – X, Y and Z.

The coefficient of variation varies from 0 to 1. Group X credited goods, demand for which was in the interval from 0 to 0.1. Category Y – the goods, the coefficient of variation which ranged from 0.1 to 0.25. The group Z includes all the other goods – that is, products with a coefficient of variation greater than 0.25.

Detailed description of categories

In category X get the goods with the smallest coefficient of variation – that is, the demand for which has not changed over time (or changed, but only slightly). The volume of sale of such goods easier to predict. Example: if this month you sold n boxes alcohol products, the following month, the sale also will make n boxes.

Category Y includes goods for which consumption changes over time, but not critically. As a rule, this group consists of  seasonal" goods – that is, the demand for which can be roughly predicted.

Category Z – the most unpredictable. It includes goods, demand for which cannot be predicted. Example: if this month you have purchased a n cans of food, it does not mean that next month you will again sell n cans. Sale may be twice greater, and may instead fall to zero. Of course, with such products difficult to deal with, and from some of them can be wisely abandoned.

General table for abc-xyz analysis

If you used the methodology of abc analysis, and after that spent xyz-study, you can use a combination of these methods in order to deepen their knowledge about the assortment of the enterprise. Make the assortment matrix, which will help to identify the most popular and the most illiquid goods. Create a table (3x3, a total of – 9 cells). Sign columns of letters "A", "B" and "C", and the line - letters "X", "Y" and “Z». Now go through the list of goods and divide them by nine cells depending on their contribution to the total revenue (abc analysis) and predictability of sales (xyz analysis). According to the results of this table, you can safely create variety his store!

So, in a cell AH get the goods that are in steady demand forecast and give your company the most profit. Of course, it ’ unconditional leaders of the market! Remember that attention should focus on the cells AX, BX, and AY. Cell BY and CY are products that have good potential and need marketing promotion. Also xyz abc sales analysis will identify the most unprofitable and unpredictable goods – they will remain in the cells BZ and CZ. Analyze the reasons for their unpopularity. Perhaps these goods will not prevent a decline in prices, they either do not need to buyers and can be withdrawn from sale.

How to xyz analysis?

So, we start to study! Quality xyz analysis consists of several important stages:

To perform abc-xyz analysis in excel, just use the following formulas:

Where V is the coefficient of variation, &sigma is the standard deviation of, Xi - volume of sales of a product for the i-th time period, s «cap” – the mean number of sales for the entire period, and n is the number of time periods (for example, 12, if you examine the data for 12 months).

After you find the values of the coefficients of variation for each product, you will have to arrange them in ascending ratio and share the goods in category X, Y and Z. If V is greater than 0 but less than 0.1, the product falls into the group of X; if more than 0.1 V but less than 0,25 – the group Y; if greater than 0.25 V – the z group.

xyz-analysis grocery store

Consider a specific abc-xyz analysis – example will affect food supermarket, all products which we conditionally divided into the following product groups: bakery products, dairy products, meat products, alcoholic beverages, confectionery, canned food and frozen food.

Running the abc analysis, we find that category And gets dairy products and alcoholic beverages, that is, revenue supermarket with these products, the most significant. In the group gets the meat and bread and bakery products, and in the group remain With deep-frozen products and any canned products, which are sold less and, respectively, less profitable.

Doing xyz analysis, we understand the products, the demand is stable, and what ’ s emergency. Thus, the group X gets stably sold meat and alcohol. Category Y combines bakery products, dairy products and frozen semi-finished products for which demand is forecast significantly more difficult. The most unpredictable were canned products and confectionery.

Recommendations for the treatment of goods from different columns/column

If you've done the analysis of the products, and distributing the whole assortment of the enterprise in the nine cells, these tips will tell you what to do with each of those goods.

So, the products that hit the bars, signed by the letters A and b, provides enterprise main turnover and gives maximum profit. Goods from columns A and b should not be removed from the production or sale, they must be available 24 hours a day, 7 days a week, otherwise you will miss your profits, and buyers will go to another shop, or would apply to representatives of the other firm. Goods from a column With the needs periodic inspection. If you have enough time on the painstaking planning of business, goods from a column With you can spend a minimum of attention.

In line X are the most stable and moving products. A detailed xyz analysis find out how many products from category X was sold last month, you will be able to buy the same quantity of these products in the next month, and, most likely, will not go wrong. Make sure that the warehouse was always a certain amount of goods from the category of Agricultural

 Example of calculation of xyz analysis

Category Y represents the goods for which demand varies over time. Analyze these goods – perhaps they are subject to seasonal fluctuations. For example, if you remember about Easter, increasing consumer interest in chicken eggs will not become a supplier of surprise.

Products from category Z to predict, so it is best not to buy large amounts of goods «future" and not keep it in stock, but rather to consider the import of such products "custom» or as the emergence of demand.

Recommendations for the treatment of different groups of goods

Remember that the goods of the cells ax and AY are the most that neither is in stable demand. It is best to release the maximum funds for the purchase of products from this category, saving on the purchase of goods from SZ.

Goods from the cell BY need good insurance reserve, so ensure their constant presence in warehouses.

Goods groups of cells AZ and BZ sell well, but the sales volume is hard to guess. Move goods from these cells on a separate system of orders – for example, do you deliver them frequently, but in small batches, controlling, sales volumes. With these groups of goods should work most experienced Manager of the company ’ not charging them to the beginner.

In addition, reduce the insurance stocks products from a group of artists, and the insurance stock of products from cell CY form only if the firm has available funds. Products from the group CZ can be safely to remove the sales, and the saved money to distribute more  the perspective" table cells.

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