ABC

Analysis - based on annual consumption. XYZ Analysis-Left out stock value VED Analysis - criticality for production. FSN Analysis - consumption rate. HML Analysis - weight / cost permit SDE Analysis - availability. SOS Analysis-based on seasonality GOLF analysis-based on suppliers

ABC ANALYSIS CONTD

ABC ANALYSIS CONTD

Control

is better Permits selective inventory control Risk fewer stocks outs Reduces investments

This

classification is already based on valueof material actually held on stores at agiven time It helps to control average inventory value of focusing effort to reduce the inventory

items are those whose value of left out stock is very high. Y items are those whose left-out stock value is moderate. Z items are the residual items, whose left-out stock value are neither high nor moderate. Materials managers, based on such analysis, can plan not only for procurement but also for secured storage of items.

VED ANALYSIS
V-Vital E-Essential

D-Desirable

VED ANALYSIS CONTD

The

Inventory policy has to keep at least one number of the vital spares irrespective of its value. Also, spare parts should be supplied to the foreign manufacture as the are also treated as vital spares because of long lead time. The desirable spare parts are those which is not available can bee manufactured by the maintenance department.

FSN ANALYSIS
Fast-moving

(F), Slow-moving (S) and Non-moving (N) items.

Past

consumption pattern F-S-N analysis is useful to control obsolescence's of raw materials, components, tools and spare parts.

HML ANALYSIS
High

value (H), Medium value (M) and Low value (L) help in bringing controls over consumption at the departmental level.

SOS ANALYSIS
S-

Seasonal Items non-seasonal Items

OS

It may be advantageous to buy seasonal items at a low prices and keep inventory or buy at a high price during off seasons.

 Example:

in case of sugar mills whose procurement is seasonal, these companies need to procure their requirement for a longer duration so as to adjust their production plans. Green tea leaves are available for a longer duration from February to October. Non-seasonal items are available throughout the year without any major price variation. Since seasonal product, which are available for a limited period, are procured in bulk to manage the production process throughout the year.

G-O-L-F ANALYSIS
It is similar to SDE analysis, and it is based on the nature of market and suppliers. Suppliers or Vendors are classified as under:
G-Government O-Ordinary

or Non-government

L-Local
F-Foreign

All

these suppliers have their own payment terms, own administrative procedure and soon. For a materials Manager, therefore, it is important to keep in mind all these issues to function efficiently and smoothly.