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Administrator Guide
Last Updated: 2024-03-08
Calculate and Assign ABC Classifications

Calculate and Assign ABC Classifications

Set up your inventory ABC classifications.
Security:
Process Inventory Count
 domain in the Inventory functional area.
You can use Workday to dynamically generate ABC classifications for inventory items configured for an inventory site, for high, medium, and low value items. We enable you to manage your inventory levels and make better decisions on which items to stock and when.
  1. Add classifications to the grid to apply to your inventory items.
  2. Access the
    Calculate and Assign ABC Classification
     task.
  3. As you complete the task, consider:
    Option Description
    Item Tags
    Use to filter items you capture in your ABC classifications by their Worktags.
    Spend Category
    Use to filter items you capture in your ABC classifications by their spend category.
    Previous Horizon Days
    Enter the number of days going backwards from yesterday that you want to track your item usage for the inventory site.
    ABC Calculations Type
    Select which calculation you want to apply to your items:
    • ABC
       - Select to apply inventory classifications to your items based on 3 values: high, medium, and low usage/dollar amount. Example: You have 100 items at a site and set percentages at 10% for class A, 15% for class B, and 75% for class C. Workday groups:
      • 1-10 items into class A.
      • 11-25 items into class B.
      • 26-100 items into class C.
    • ABC/XYZ
       - Select to apply another layer of statistical review to classifications that calculates the standard deviation of usage. Use this type to determine the variability of demand for your items. The
      X Percent
       field classifies items of low demand variation. The
      Z Percent
       field classifies items of high demand variation. We recommend performing ABC/XYZ calculations for the entire inventory site instead of a subset of items to ensure accurate classification of inventory items.
    Workday uses these values to rank purchase items based on their total cost and usage from high to low:
    • Average Daily Usage, which equals (
      Issues
       plus
      Shipments
       minus the
      Return Put Aways
      ) divided by the
      Previous Horizon Days
      .
    • Total Cost, which equals the
      Average Daily Usage
       multiplied by
      Average Cost
      .
    • The Previous Horizon Days
      .
    If an item lacks usage transactions before the specified
    Previous Horizon Days
    , Workday considers the number of days since the first usage within the specified horizon. Example: The
    Previous Horizon Days
     is set to 30 and the item's initial usage transaction occurred only 15 days ago. Workday uses 15 days instead of 30 days to calculate the Average Daily Usage.
    Auto Update ABC
    Select to automatically assign and update your items with ABC or ABC/XYZ percent values after you run your usage calculations. Workday assigns these values to the inventory site settings for the items.
  4. Assign usage percentages to the
    ABC Percent
     section fields.
  5. (Optional) Assign demand variation percentages to the
    XYZ Percent
     section fields.
    Workday displays the
    XYZ Percent
     fields when you select
    ABC/XYZ
     as the
    ABC Calculation Type
    .
Workday ranks items by total cost in descending order and uses assigned percentages for ABC/XYZ to categorize your items. Workday rounds up when calculating the number of items for each category. Example: You have a total of 15 items, and want a 30% allocation of your items into category A, so 5 items are classified in category A.