XYZ analysis makes it possible to evaluate the stability of sales and changes in demand for the company's products. The main goal of this method is to forecast the level of sales and anticipate fluctuations in demand for goods based on the data obtained.
The result of using two components fronk oil email list at once is the ABCXYZ analysis matrix, on the basis of which it is possible to effectively optimize warehouse stocks and, if necessary, adjust the product range.
To understand the features of the XYZ instrument, we will have to recall some statistical formulas. The key one is the formula for the standard deviation of the variation series :
Formula for the standard deviation of a variation series
Where:
σ — standard deviation;
Xi is the value of the i-th period;
X ср — the value of the average period;
n is the number of periods.
This formula is designed to estimate the value dispersion in relation to the arithmetic mean. The smaller the standard deviation, the closer the selected value is to the mean. This indicator is used as a guide when planning in the field of logistics.
Another key indicator for analysis is the coefficient of variation . Thanks to its calculation, it becomes possible to compare the stability of demand for different products regardless of their sales volume.
Thus, a product with a standard deviation of 100 can be sold in quantities of 300 or 30 thousand pieces monthly. In the first example, the significance of monthly fluctuations is 50%, and in the second - 0.5%. It turns out that the second product is sold more stably, that is, the demand for it is easier to predict.
The coefficient of variation is the ratio of the standard deviation to the mean value of a particular indicator and is calculated using the formula:
Coefficient of variation
Where:
σ — standard deviation;
x is the average value.
As a result of the analysis, the product range can be divided into three groups depending on the value of the variation coefficient. Here is how the resulting categories are designated:
X — a group with a deviation of up to 10%. This includes items whose sales are consistently high and demand is easy to predict.
Y — a group with a deviation of 10 to 25%. This group includes products with seasonal sales, the demand for which is more difficult to predict than in category X.
Z — a group with a deviation of more than 25%. This category includes goods whose sales are irregular and demand cannot be predicted.
There are no uniform standards regarding the value boundaries for grouping by X, Y and Z. Everything depends on the specifics of a particular company, the seasonality of products, current market trends and other conditions. The analysis of the assortment according to the ABCXYZ system should be carried out taking into account these features.
Thus, for category X, the maximum deviation can be at the level of either 10 or 15%. At the same time, the values for other categories also shift: 15–50% for Y and from 50% for Z.
The XYZ analysis methodology consists of six stages:
First, the object for analysis is determined (for example, a specific client, supplier, product category, individual product from the assortment, etc.).
Next, they decide on the parameter by which the analysis will be conducted. Most often, the sales volume of the product or, for example, the number of components shipped from the warehouse are chosen for this. In this case, the unit of measurement does not matter for the calculations.
Now you need to decide on the number of periods that will be taken into account in the analysis: you can take a cycle from one week to several months, a year.
The period for analysis is determined depending on the characteristics of the company and the product. There is no universal recipe, but there are a number of recommendations:
the selected period must exceed the standard product delivery cycle for your situation;
The longer the period of analysis you take, the more indicative the result will be.