What is meant by ABC classification management of inventory in financial management?

ABC inventory classification management method refers to the inventory items according to the number of varieties and occupied funds, divided into particularly important inventory (Class A), generally important inventory (Class B) and unimportant inventory (Class C) three levels, and then for the different levels of management and control, so that the classification management method can be achieved: compression of the total amount of inventory, the release of the occupied funds, inventory Rationalization and saving management inputs.

Procedures

1, the average annual consumption of various types of inventory materials were multiplied by its unit price to calculate the total consumption of various materials and the total amount of money.

2, according to each variety of material consumption of the amount of money in the order of the size of the rearrangement, and respectively calculate the various types of materials occupied by the proportion of the total amount of consumption and the total amount.

3, the amount of consumption of appropriate segments, according to certain criteria into A, B, C.

Extended information

A class of goods management methods:

1, in accordance with the demand, small quantities, multiple batches of purchases into the inventory, it is best to achieve the management of the system of just-in-time, to be able to increase the rate of turnover of funds, to be able to make the Inventory to maintain the optimal period of validity, can reduce warehouse management costs, can get the benefits of price reductions in a timely manner: of course, the seasonal reserves and price increases before the reserve is also unavoidable.

2, in accordance with the Kanban orders, small quantities, multiple shipments, it is best to achieve just-in-time system out of the warehouse, to avoid items stored for a long time in the production line or in the hands of the customer, resulting in backlogs of loss, resulting in false demand and over-limit inventory, which is not conducive to balanced production and operation.

3, at any time to monitor the dynamic changes in demand, analyze and predict which is the daily demand, which is a temporary concentration of demand, so that the inventory and various needs to adapt.

4, the scientific setting of the minimum quota, safety stock and ordering point alarm point, to prevent the occurrence of stock-outs; understanding of the inventory of large customers, in the need for temporary transfers; monitoring the supplier's on the way material varieties and quantities of the arrival time; with the supplier and the user *** with the study of alternatives, as far as possible to reduce the unit price; the development of contingency plans, remedial measures.

5, daily inventory and inspection.

6, ABC inventory classification and management method is not applicable to the MRP system to control the material demand, it is facing the final product. For continuous and balanced production, every relevant item has the same important role, even a screw is able to make the production interruption. Therefore, it is also important to pay attention to the management of some critical materials and not to emphasize the management of Class A items.

Baidu Encyclopedia - ABC Inventory Categorization Management Method