ABC analysis in Zoho Inventory classifies your inventory into three categories: A items (top 20% of items contributing roughly 80% of revenue), B items (moderate contributors), and C items (large number of items contributing minimal revenue). This framework helps prioritise inventory management effort where it matters most.
Run the ABC analysis report in Zoho Inventory to see how your items rank. Use this to set tighter reorder points and safety stock for A items, moderate controls for B items, and minimal oversight for C items. Focus vendor relationship management effort on suppliers of A items.
You can also perform ABC analysis based on order frequency or gross profit rather than just revenue. An item sold 500 times at low margin might be classified differently when viewed through a profitability lens versus a volume lens.
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