inventory analyticsAny business understands the power of data. Hard numbers lay the groundwork for the organization, holding up and supporting every wall and beam. Just as with an actual building, it’s important to put thought into the foundation. If you don’t properly consider this “design” phase, how do you know how your foundation will hold up?

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One critical data piece for a business to track from the start is its inventory. What’s moving? What isn’t? How long are products in inventory for? It’s important to understand these pieces of information in order to control costs and capture revenue. Here’s how organizations can use inventory analytics as a tool to meet and design their end goals.

Know what’s selling and what’s not selling

Many businesses know what their top selling products are. After all, these are the products that are the lifeblood of their business. But can they confirm this belief with numerical evidence? Managing an organization without an analytics tool is running a business that is based off of assumptions. It is easy for one to say that product A is more popular than product B, due to its demand. But shouldn’t companies be more interested as to how product A is performing against product B? And how they can market product B to be just as successful?

When you evaluate the performance of your products based off of assumptions, you begin to lose control of your costs. In a recent MDM article, Mike Brockway, consulting director at Dimensional Insight states, “For most companies, if they aren’t keeping on top of their inventory analytics, then they are going to fall behind for sure.” With an inventory analytics tool, you can feel confident in managing your operations. It helps you to understand why your top selling product is your top selling product and how to diversify and strengthen your product portfolio.

The ABC System

Not only will forecasting methods benefit your marketing tactics, but they will also lead to a less wasteful organization. If you don’t know the quantities of what is stored inside of your warehouses, your product values will decrease. This is why it is important to prioritize the urgency of your products by understanding their lifespan and to what value they contribute towards the success of your organization.

The “ABC System” is an inventory control method that categorizes and prioritizes products based on their individual value. Qualitatively, the categories generally rank:

  • Class A: Products are considered to be of the highest value, contributing the most towards your sales.
  • Class B: These products are of high value, but aren’t the main source of revenue for your organization.
  • Class C: Products in this group represent the smaller successes, the lesser-known triumphs that prevent your organization from being at a stand-still.

Quantitatively, the categories generally rank:

  • Class A: 20% of the items contribute to 70% of your annual consumption.
  • Class B: 30% of the items contribute to 25% of your annual consumption.
  • Class C: 50% of the items contribute to 5% of your annual consumption.

By dividing and placing products into three separate categories, organizations can understand how products are performing and which ones are responsible for growth. This product-focused data also provides further insights into customer behavior, understanding previous purchasing patterns while predicting future choices.


Once you understand what products are selling and who likes them, the only thing left to do is to determine when to sell them. With any transaction, the timing must be right. Inventory forecasting gives your organization a better look as to when to push your products to your consumers. Knowing when profitability is predicted to be successful, your organization can design a marketing plan to focus on who your sales team wants to reach and with what product.

What’s next?

Every growing business recognizes that data is power. Once you have the ability to dive into the numbers that built your organization, then you can make choices to further your opportunities for growth. What other cost-related challenges are you facing?

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Kayla Chiara