A systematic inventory categorization method that divides products into three groups based on their value and importance to warehouse operations. “A” items represent high-value products that typically account for 70-80% of total inventory value but only 10-20% of total items. “B” items are moderate-value products comprising 15-25% of value and 20-30% of items. “C” items are low-value products representing 5-10% of value but 50-70% of total items.
This classification enables warehouses to optimize storage strategies, cycle counting frequencies, and resource allocation. A-items receive prime picking locations near shipping areas and frequent inventory audits, while C-items can be stored in less accessible areas with less frequent monitoring. For example, a pharmaceutical distributor might classify high-cost prescription drugs as A-items stored in climate-controlled, secure zones with daily counts, while basic over-the-counter medications become C-items in standard storage with quarterly counts. This targeted approach improves operational efficiency and reduces carrying costs.
