“XYZ” Inventory Classification & Challenges

Abstract

Inventory Management is a buzz word these days. As much as the industry focuses on revenue, profits, top lines and bottom lines there is more focus these days on inventories, working capital and efficiencies. Complexities of managing these supply chains have increased because of various factors like globalization, increased product portfolio, decentralization etc. There are various inventory models and matrices available today to monitor the supply chains which are mentioned in this paper but the main focus is to study the volatility of the supply chain and its impact on Inventory. One of the ways to classify items is based on Predictability (XYZ Analysis). Items which have  Uniform demand as X,  Varying demand as Y  Abnormal demand as Z It is always easier to group items with similar patterns and apply appropriate strategies to each group differently. But we need to understand if there are limitations and common underlying issues before these strategies are employed. Keywords; XYZ Analysis, Forecast Optimization, Inventory Planning