Quick Summary: Refine stocked item classification using the dual-ranking ABC (value) and HML (velocity) matrix to prioritize inventory investment.
Why Further Classification Matters
While primary stocking indicators define an item's overall replenishment strategy, the 9-block classification matrix provides a more granular view for stocked items. This dual-ranking system helps you understand an item's criticality based on its value and unit movement, enabling more precise inventory planning.
The 9-Block Matrix Explained
Simply classifying an item as Stocked is often too broad for effective planning. To make your planning more efficient and effective, the app refines stocked items using a dual-ranking system based on:
💰 Value contribution (A, B, C)
📦 Unit movement (H, M, L)
You can view this matrix by navigating to Classification in the left pane and selecting the Matrix tab.
ABC - Value Classification
This ranks items based on their forecasted or historic sales value.
A-items: Typically contribute to the top 80% of total sales value (e.g., high-value electronics). These are often less than 20% of total items.
B-items: Represent the next 16% of sales value.
C-items: Represent the final 4% of sales value (e.g., small, inexpensive accessories).
HML - Unit Movement Classification
This ranks items by the forecasted or historic number of units sold.
H (High): Typically contribute to the top 80% of unit sales (e.g., fast-moving consumables).
M (Medium): Represent the next 16% of unit sales.
L (Low): Represent the final 4% of unit sales (e.g., niche or slow-moving items).
Examples of Combined Classifications
Combining these two rankings places every stocked item into one of nine buckets, allowing for highly targeted policies.
Code | Example | Description |
AH (A-High) | 📱 Mobile phones | High value, fast movers |
AL (A-Low) | 🥣 Crystal salad bowl | High value, slow movers |
CH (C-High) | 🥤 Drinking straws | Low value, fast movers |
CL (C-Low) | ✍️ Brown ink pen | Low value, slow movers |
Reading the Classification Matrix
The matrix provides a high-level summary of each bucket, showing:
Unique item count
Total stock value
Calculated model value
Average future monthly demand (or historic sales, depending on setup)
Achieved fill percentage
Target fill percentage
This insight is crucial for guiding your strategic thought process when setting your policy defaults.
➜ For more on this topic, read: Strategic Thought Process for Policy Defaults
Classification Percentage Split Explained
How To: Set Classification Parameters
⚠️ Watchouts
Empty categories: Depending on your inventory profile, not every category in the 9-block matrix will contain items.
💡 Tips
Forecast vs. History: The ABC/HML classification can be based on historical sales or future Forecasts. Using forecasts is often more effective for managing growing, declining, or seasonal products. If you use History, the "Demand" tab on the matrix will appear as "C.O.S." (Cost of Sales) instead.
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