If a company has a large assortment, it is not always obvious which products sell best and have stable demand and profit. At the same time, the demand for any goods is as important as the volume of revenue.
In this article, we will tell you what XYZ analysis is. We will analyze the essence of the method and how it is useful for business. We will highlight its main advantages and disadvantages. In particular, we will learn how to conduct XYZ analysis and how it can be combin with another, no less important tool – ABC analysis.
What is XYZ analysis in simple terms and why does business ne it?
XYZ analysis is a method of classifying goods and services that helps a business manage inventory and forecast demand bas on sales statistics and customer orders.
In other words, the method reflects how stable the country wise email marketing list demand is for a particular product from the range over a certain period of time. Depending on the level of stability, products are conventionally classifi into three categories – X, Y and Z.
Pros and Cons of the XYZ Method
XYZ analysis allows you to determine and forecast demand, as well as organize inventory management. In particular, the method can be us to control product deliveries. It, like any other analytical tool, has its advantages and disadvantages.
Understanding these aspects will allow the company loss of focus on roi to use the methodology more effectively and take into account the nuances that may arise while working with it.
How to Conduct XYZ Analysis: Algorithm and Calculation Examples
You can perform XYZ analysis quite quickly and without much effort if you know several important formulas and correctly follow the algorithm of actions. Let’s consider how XYZ analysis is perform in practice.
Step 1: Collect sales data and prepare a spreadsheet
Before conducting an analysis, the first thing you ne to do is take the company’s sales data for a certain period and enter it into a table.
At this stage, it is very important to accurately select the b2c fax interval for analysis, as well as the unit of measurement. The period, for example, a month or a quarter, is select depending on the specifics of the company, its sales cycle. Most often, it is a month. At the same time, it is worth taking sales reports for at least 6 months, and better for a year or two years or more. But here everything depends on your field and the goals of the analysis.
