What is abc analysis on spares parts?

The ABC analysis is a business term used to define an inventory categorization technique often used in materials management. It is also known as Selective Inventory Control. Policies based on ABC analysis:

• A ITEMS: very tight control and accurate records.
• B ITEMS: less tightly controlled and good records.
• C ITEMS: simplest controls possible and minimal records.

The ABC analysis provides a mechanism for identifying items that will have a significant impact on overall inventory cost,[1] while also providing a mechanism for identifying different categories of stock that will require different management and controls.

The ABC analysis suggests that inventories of an organization are not of equal value. [2] Thus, the inventory is grouped into three categories (A, B, and C) in order of their estimated importance.

'A' items are very important for an organization. Because of the high value of these ‘A’ items, frequent value analysis is required. In addition to that, an organization needs to choose an appropriate order pattern (e.g. ‘Just- in- time’) to avoid excess capacity.'B' items are important, but of course less important than ‘A’ items and more important than ‘C’ items. Therefore ‘B’ items are intergroup items.'C' items are marginally important.

ABC analysis is a concept used for spare parts management and control.

Spare parts ABC analysis is a method of classifying your spare parts on the basis of your consumption.

by ABC analysis you can manage and control your spare parts AVAILABILITY. by applying ABC analysis you wouldn't be OUT OF STOCK for specific spare parts.

let's take a precise look into your spare parts stock, with applying80-20 rule.

you will find about20% of your spare parts items represent80% of your consumption. ( Assume it A category )

And about50 % of your spare parts items represent15 % of your consumption. ( Assume it B category )

And about30 % of your spare parts items represent5% of your consumption. ( Assume it C category )

So, by applying ABC analysis, you would make a precise control and management of your spare parts warehouse on the basis of your needs and consumption. In addition, you willl maintain a highly level of spare parts availability during anytime.