For necessary background, please preread Mastering Classifications before proceeding with this article.

Purpose

Configure the system-level rules the app uses to automatically classify items.

Step 1: Open Classification Settings

Navigate to Settings in the left-hand menu and select Classification.

Step 2: Configure Obsolete Items (Optional)

Tick Classify obsolete items to enable the rule.
Specify how old an item must be and how long it must have had no sales to be auto-classified Obsolete.

💡Note: This rule applies only to items with no stock on hand and no stock on order.

Step 3: Configure Non-Stocked Items (Optional)

Tick Classify non-stocked items to enable the rule.
Specify how old an item must be and the maximum number of “hits” (months with any sale, regardless of quantity) within a period to be auto-classified Non-stocked.

Step 4: Configure ABC and HML Items

For both ABC (value) and HML (velocity), choose the Basis for calculation: Forecast or History.
For ABC, select Weighted by (for example, Cost price, Selling price, or Margin).
Enter the percentage splits. Defaults: 80% for A and H, 16% for B and M, 4% for C and L (you may change these).

💡Note: Whenever possible, set the Basis for calculation for your ABC/HML items to Forecast instead of History. This is crucial for new items, which may not have enough sales history to get the classification they deserve. Using the forecast ensures they are planned for appropriately from the start.

Step 5: Apply Changes

Click Reclassify to apply your new settings to all items.

Key Rule Limitations

The auto-classification rules for Obsolete and Non-stocked have very specific limitations. These rules apply only to items imported as Stocked and will not apply in the following situations.

Raw Materials
A raw material in a Bill of Materials (BOM) may have no direct sales forecast, but it will have BOM demand to build a finished product. The rule ignores these items to prevent stockouts of critical components.

Items Supplied to Dependent Locations
An item at a central warehouse (DC) may not have a sales forecast, but it may have a distribution forecast to supply dependent branches. The rule ignores these items to ensure branches can be resupplied.

Minimum Level Overrides
If you have set a minimum stock level for an item, the rule will not apply. This ensures the system can still place orders to respect the minimum required level, which an Obsolete or Non-stocked status would otherwise prevent.

Frozen Forecasts
Both rules have an option to unless the item has a frozen forecast more than zero. Ticking this prevents the rule from classifying an item you have deliberately set a future forecast for.