What is ABC Classification
Classification of groups of SKUs based on velocity, such as units shipped per month or some similar attribute. The SKU portfolio is then split into perhaps three classes labeled A, B, and C - from fast-movers (A’s) to slow-movers (C’s). Sometimes, more than 3 groups are defined, such as adding a “D” group. This categorization is used in several ways, such as in which locations products will be put away once received, or how SKUs should be slotted in forward pick areas.
Importantly, velocity can vary by unit of measure (e.g., pallet, cases, “eaches”) for the same SKU. Velocity is also subject to seasonal variations, or may change over a product’s lifecycle. A WMS can receive velocity categorization from another system such as the ERP, or it can calculate and assign velocity codes based on actual warehouse operational data.