ABC analysis: useful, transparent — and only the beginning
ABC analysis ranks products or customers by contribution and groups them into A, B and C classes. It is an excellent way to see concentration, but a revenue class alone does not tell you whether a product or customer is strategically important, profitable or operationally complex.
What is ABC analysis?
A common 80/15/5 approach ranks entities from highest to lowest contribution. A-class entities account for roughly the first 80% of value, B the next 15%, and C the final 5%. EightyTwenty+ keeps quantity, revenue and margin classifications separate so one measure does not silently replace another.
Why ABC analysis can mislead when used alone
A C-product can still support an A-customer, carry attractive margin, lead its category, or complete an important range. EightyTwenty+ therefore treats ABC as an analytical building block rather than a recommendation engine.
What to analyse next
After concentration, examine customer-product relationships, dependency, margin and ordering complexity before deciding what deserves management action.