World Class Master Scheduling: Best Practices and Lean Six Sigma Continuous Improvement

ABC STRATIFICATION

Along with order policy code, stratification also plays an important role in ordering inventory from MRP signals. Inventory stratification is the segmentation of items into layers by monetary or usage values. Vilfredo Pareto s 80/ 20 rule works well here. Generally, the dividing layers are done by:

A = 75% of the monetary value of inventory 10% of the item numbers

B = 15% of the monetary value of inventory 10% of the item numbers

C = 10% of the monetary value of inventory 80% of the part numbers

Some organizations also have a D category that divides the C items into two groups. D items are usually components that are very inexpensive (such as common small washers, screws, etc.), with values much less than one cent each.

Most ERP business systems can automatically calculate the inventory layers and give the user parameters that can be set as desired. Stratification is done to make sure there is more emphasis on the items that have the most risk associated with them. Therefore, critical components that are difficult to get or are allocated are forced into the A item code regardless of the ABC calculation.