In large production systems, not all inventory items can be controlled uniformly. Selective approaches assign control priorities based on item characteristics such as nature, usage rate, cost, and procurement complexity.
1. ABC Analysis
Based on the principle "thick on the best, thin on the rest" (or Always Better Control):
- A: High consumption – strict control
- B: Moderate consumption – fair control
- C: Low consumption – open storage
Classification is derived from usage value data and often visualized as the Pareto curve (80-20 rule), showing that a small percentage of items account for a large portion of total value.
2. VED Analysis
Applied mainly to spare parts, classifying items based on their criticality to production:
- Vital: Absence stops production
- Essential: Absence reduces efficiency, but production continues
- Desirable: No immediate production impact
3. HML Analysis
Classification by unit value rather than usage:
- High value
- Medium value
- Low value
Helps set procurement authority levels based on hierarchy and cost thresholds.
4. SDE Analysis
Classification based on procurement difficulty:
- Scarce: Limited availability, long lead times
- Difficult: Moderate procurement challenges
- Easy: Readily available
5. FSN Analysis
Classification by consumption rate:
- Fast-moving: High issue rate, require uninterrupted supply
- Slow-moving: Moderate issue rate
- Non-moving: Near-zero consumption; may be obsolete
Aids in controlling obsolescence and planning procurement cycles.
6. GOLF Analysis
Classification by source of supply:
- G: Government
- O: Ordinary
- L: Local
- F: Foreign
Supports the application of specialized procurement procedures.
7. XYZ Analysis
Classification based on inventory value at financial year-end:
- X: High value
- Y: Medium value
- Z: Low value
Highlights items that tie up significant capital in inventory.