ABC analysis (or ABC classification) is the application of the Pareto principle to the management of stock and customers. It classifies items into three categories: A (typically 20% of items representing 80% of the value — the critical ones), B (intermediate) and C (the long, marginal tail). The prioritisation of attention and control adjusts to the category — A items deserve frequent review, tight stock control, a close relationship with the supplier; C items can use simple automatic-replenishment policies.
The analysis applies in multiple contexts: stock (inventory value), sales (customers or products by revenue), purchasing (suppliers by spend), defects (failure modes by impact). In each case the rule is similar — a relatively small number of items concentrates most of the value or risk, and that is where the hours of whoever manages should go.
MyBusiness-ITV delivers pre-built ABC analysis from various angles (stock, sales, customers, suppliers), with drill-down and the option to configure the thresholds. For companies in growth where the catalogue is expanding fast, a quarterly review of the ABC classification avoids surprises — last year's C item may be an A today with a shift in demand.