A B Stock Analysis
In our previous blog we talked about the strategic importance of service levels to differentiate your Office Supplies & Stationery Business from the rest. A good service comes in different forms and shape, one of which is fulfilling customers orders in a timely manner.

In order to fulfill orders we need the right stocks in our warehouse/store and managing this stock is key to customer satisfaction. We touched upon A & B stock analysis and how it helps achieve this. In this blog we will look at A,B,c stock management in more detail.


Step 1: Data Extraction

We need to get the right information from our ERP/Accounting system to start the analysis.

For each warehouse/store we would extract

1. The SKU
2. 6 Month Quantity of Sale ( month by month)
3. Avg Cost
4. Date of SKU creation
5. Stock Description
6.Stock On Hand
7.Minimum Order Quantity


Step 2: Data manipulation for A stocks

This information can be extracted into a spreadsheet Through simple excel functions we can identify

* all SKU's that have a quantity of sale value > 0. ( Print true if all fields are >0)
* We also need to take the sum of Quantity of Sales for the past 6 months. ( Sum of all Quantity of Sale fields)

We can then sort the list to display all True values and then sort it by the SUM of Sales.


Step 3: Analysis for A

We tag stocks with a high Sales Total as A in the spreadsheet. For items with a low Sales total, we need to scan through the Avg Cost, product description
and minimum order quantity to determine whether they should be classified as an A item. Else we tag them as a B stock.

Step 4: Data manipulation & Analysis of B

B stocks are stocks that are less frequent in sales but we still need to hold them in stock but not in high quantities. To identify these stocks we identify

*All SKU's that have a quantity of sale value > 0 for 3, 4 or 5 months out of the past 6 months. ( we tag them as 3,4,5 respectively)
* We also need to take the sum of Quantity of Sales.

For SKU's that are tagged as 4 and 5 and high Sales Total, we could check the Date of Sku creation to see if they are newly introduced lines and are selling
well. We may consider tagging it as A. We then tag the rest of the SKU's as B.

Step 5: Identify C stocks

For all the remaining SKU's we check the Stock on hand and see if any of those are >0. If they are greater than 0 then
*we tag them as C stocks after checking the Date of Sku creation.
* Calculate Stock on Hand* Avg Cost.

This will give the total stock we have in our warehouse/store that are not moving and are falling into the dead stock pile. This needs to be acted upon
quickly.


Step 6: Generating Order Sheet

Once we have tagged A,B,C stocks in the spreadsheet, we could then import the tag into the specific warehouse file against the SKU's. With this information in
the system (through custom fields which you can create), you can manipulate your ordering system to generate the following information

* Display all stocks that are tagged as A where the Avg Quantity of Sales is greater than the Stock On hand for your ordering period.

You could order one month worth of stock for A items during the beginning of the month. You could also add an additional week or two week's worth of stock by increasing the ordering period to cover for any lead time. This will make sure that at the end of the month you have a week's worth of stock and are not out of A stock due to beginning of month supply delays.


For B stocks we run the ordering system in the same manner but the ordering period will be less to make sure that we do not over stock.

Step 7: Managing C stocks

The stocks that are categorized as C need to be double checked and cleared. You could read through the Dead Stock blog for possible ways to do this.


In our next blog we will look at how to analyze fill rate to monitor ordering and check on A stocks daily.