ABC Analysis

Use

ABC analysis classifies objects in a list with reference to a key figure.

Features

You can use ABC analysis to classify objects into so-called segments:

  • A segment = important objects
  • B segment = less important objects
  • C segment = relatively unimportant objects

EXAMPLE: In Product Cost Controlling (CO-PC), you can use ABC analysis to obtain an overview of the production orders in a plant that incur the highest actual costs:

  • The A segment shows the orders that incurred the highest costs (representing 50% of the total actual costs).
  • The B segment shows the orders with the next-lowest actual costs. Together, segments A and B represent 80% of the total costs.
  • The C segment shows the orders that incurred the lowest costs.

In ABC analysis, the system:

  1. Sorts the objects in ascending or descending order with reference to a key figure.
  2. Classifies the objects on the basis of certain criteria

Classification Criteria

The analysis answers the question:
What percentage of the total do(es) the value(s) for the selected object(s) represent?

Enter the desired percentage breakdown.

EXAMPLE: Suppose the selected breakdown is A = 50%, B = 30%, and C = 20%. The objects in the list are sorted in ascending or descending order with reference to the value of the key figure.

        • The A segment shows the objects whose total amounts to 50% of the sum total.
        • The B segment shows the objects whose total amounts to the next 30%.
        • The C segment shows the remaining objects.

The analysis answers the question:
What is the absolute value of the selected key figure(s)?

Specify the threshold values:

        • Between the A and B segments
        • Between the B and C segments

The system classifies the objects on the basis of these reference values.

The analysis answers the question:
What percentage of the total number of objects do(es) the selected object(s) represent?

EXAMPLE: Suppose the selected breakdown is A = 50%, B = 30%, and C = 20%. The objects in the list are sorted in ascending or descending order with reference to the value of the Key figure.

        • The A segment shows 50% of the total number of objects.
        • The B segment shows the next 30% of the total number of objects.
        • The C segment shows the remaining objects.
    • Specify the number of objects to be assigned to the A and B segments.
    • The C segment shows the remaining objects.

Procedure

To do an ABC analysis:

  1. Select a key figure column to be used as the ABC analysis criterion by selecting the column header.
  2. Choose ® ABC Analysis. In full-screen mode, choose Goto ® ABC Analysis.
  3. The ABC Analysis: Strategy dialog box appears.
  4. Choose the sort type (ascending or descending) and the classification method. Specify values for the classification.
  5. Choose Continue.

Result

A list appears with the segment (A, B, or C) in the first column, as in the following example:

After each key figure, the percentage share of that key figure of the total appears, along with the cumulative percentage share. In addition, the list displays the total and subtotals for:

  • Each segment
  • The A and B segments
  • The B and C segments
  • All segments

In the results list, you can:

  • Hide columns

Select the column, and choose .

  • Display columns

Reverses the Hide columns function. Choose .

  • Print

Prints the results list of the ABC analysis. The printout corresponds to the display – that is, hidden columns do not appear in the printout.

  • New analysis

To trigger a new ABC analysis of the same objects, choose New analysis.