How does your inventory/product segmentation work?

We classify inventory/products using different factors. This helps identify critical A items needing high availability, slow-moving D items to reduce, and everything in between for better management.

We categorize inventory using multiple dimensions:

1. GM$: The total dollar value of the transactions.
2. GM%: The Gross Margin expressed as a percentage of the GM$.
3. Last Sale: The total number of days since the last customer transaction.
4. Frequency: The number of transactions with that customer over a defined period.
5. Customer Count: The number of distinct customers.

Our system goes beyond simple categorizations by analyzing multiple factors to give you a complete view of your inventory.

Using machine learning, we process raw data to organize and group similar items so that each item is accurately categorized. This ensures that when your team makes decisions about a specific item, they clearly understand its importance and priority.

Product classes 

• Critical A: Distributors cannot run out of these critical high-moving items. Stock-outs mean lost sales now and risk to future sales.
• Critical B: Inventories should stock these items, or risk lost sales.
• Important C: Inventory managers handle these important items, despite lower demand compared to categories A & B.
• Non-Critical D: Distributors may carry non-critical slow-moving items for their customers' convenience.
• Non-Critical E: The non-critical items in this class are nearly dormant.
• Brokered: Brokered items do not sit in the distributor’s inventory. They are drop-shipped from the supplier or delivered in some other way.
• Contract: A signed agreement between the distributor and the distributor’s customer would include contract items:
  • (1) Agreement would set stock levels for specific SKUs.
  • (2) Vendor-Managed Inventory (VMI) or onsite vending machines.
• New: Items ordered for the first time within the last 90 days lack the transactional history necessary for processing.
• Dormant: Products are dormant if unsold for 12 months, yet there's been occasional activity or quotes.
• Dead: Products are dead when no sales or quotes have occurred within the previous 12 months.