Product ranking
Ranking is a method of classifying products based on their relationship to other products in your inventory. It is used by your buyer to ensure that products that experience a higher volume of sales are ranked higher, and that replenishment controls are in place to ensure adequate stock levels for the higher ranked products.
When products are ranked, they are placed into three or more groups for the purpose of stock control and planning. Called ABC ranking, these groups represent products ranked based on their sales hits. Hits are the number of times a product appears on a sales order. By tracking a product’s hits on sales orders, transfers, and even lost business transactions, you can rank a product by the number of transactions it is included on.
The products with the most hits are ranked as A items. A items generally represent a smaller group, about 15-20%, of products that result in around 75-80% of the annual demand. For the purpose of inventory control and replenishment, the greatest attention should be paid to this category of A products.
Products with fewer hits are ranked B-Z, based on how your ranking levels are defined. Least attention is paid to the lowest ranks.
Ranking methods
You can determine a product’s ranking based on the percentage of hits or by a set number of hits. This is defined in Product Replenishment Ranking Setup. After you select either percentage or number of hits for the Rank Based On option, you can define the parameters for each of the rank levels on the Detail Ranks Records view.
The method you choose should be reflective of the range of products you offer your customers. If you have a fairly limited product range, we recommend that you use the percentage ranking method. The percentage method gives you a fairly accurate representation of all of your products if you limit your ranks to five levels or less.
If you have a broad range of products, you may want to consider ranking by number of hits. This ensures that slower-moving products are not ranked higher than they ought to be.
Updating ranks
Ranks are created and updated for products when you run the Product Administration Inventory Classification and Rank Report. Three options are available to perform the ranking process. Ranks and classes are two separate parameters that are used by the system for different categorization purposes. Ranks do not replace classes, and you can perform both updating processes simultaneously.
Ranking can be performed for all products within a warehouse, or all products company-wide. These options allow you to establish a rank for the product within a warehouse, without considering how often that product sells in other warehouses. The company ranking reflects how the product is ranked company-wide.
These products are not ranked by the Product Administration Inventory Classification Report:
- Frozen products
- Inactive products
- Direct order products
- Order as needed (OAN) products
- Labor products
- Products whose Frozen option is selected in the Ranking section in Product Warehouse Product Setup-Ordering
After the rank has been calculated for a product by the Product Administration Inventory Classification Report, Product Warehouse Product Setup is updated with the product’s rank within the company, and warehouse, if these options were selected on the report.