Enter each item's cost, stock, quantity sold and last sale date, and its class in the ABC inventory analysis appears, slow-moving stock is flagged with its value, and damaged or lost quantities go on a separate sheet. The slow moving inventory report and the damage and loss report are built from the same figures.
Consumption value = quantity sold × unit cost, and items up to 80% of the cumulative total are class A. In the sample, three of eleven items carry SAR 269,550.00 of SAR 339,335.00, slow-moving stock is worth SAR 8,110.00, and damaged and lost goods SAR 1,540.00.
What is ABC inventory analysis
ABC analysis ranks items by their consumption value over a period, separating the few that carry most of the value from the many that matter little, because watching every item with the same care wastes attention. In the auto parts example only three items (engine oil, tyres and batteries) carry SAR 269,550.00 of SAR 339,335.00, while eight items share the rest.
How to classify items into A, B and C
- Work out each item's consumption value: quantity sold in the period × unit cost, not selling price.
- Rank items from the highest value and add their shares of the total cumulatively; the sheet calculates the cumulative share without sorting.
- Items up to 80% are class A, up to 95% class B, and the rest class C.
- Open the slow-moving and damage reports, write your actions, then download them for approval.
The 80% and 95% cut-offs are a common rule of thumb, not a regulation; change them in Settings in advanced mode if your business depends on one or two items, as some appliance shops do. The Turnover column next to the class shows how fast each item moves: engine oil 8.57 times, leather seat covers 0.21. Working out the inventory turnover ratio for the whole business is a separate tool.
How to spot slow-moving stock and deal with it
The template flags an item as slow-moving when more than 90 days have passed since its last sale; the limit can be changed. The Days since sale column = today − last sale date. In the sample three items worth SAR 8,110.00 qualify, the largest being seat covers at SAR 4,060.00. Clearance options: a time-limited discount, a bundle with a class A item, or a return to the supplier if they accept an exchange, with purchasing stopped until stock comes down. The slow moving inventory report lists them by value with your actions underneath.
Using ABC results in purchasing decisions
Class A items are reviewed weekly, ordered in small frequent batches and negotiated on first, because every extra riyal there is cash tied up. Class B is reviewed monthly. Class C is ordered in larger batches at longer intervals, which cuts purchase orders with little effect on cash, while you keep an eye on the shelf space it takes. Advanced mode adds a reorder point column = daily usage × lead time. Download the workbook in Excel and these calculations stay live formulas.
Common inventory analysis mistakes
- Classifying by selling price instead of cost, which pushes high-margin items into class A.
- Ignoring an item with no sales in the period; its consumption value is zero, but its stock may be cash tied up on the shelf.
- Writing off damaged stock before the damage and loss report is approved.
When sales and stock live in separate files
Microtec's ERP accounting system, built for businesses in Saudi Arabia, brings sales, purchasing, inventory and finance into one place, so item classes and slow-moving figures become part of your everyday data.
Frequently asked questions
How often should I redo the ABC classification?
Every quarter for most shops, and every month for seasonal trades. Set Days in the analysis period to 90 in Settings when you analyse a quarter, and enter the quantity sold in that quarter, so the reorder point stays right.
Do item classes differ between branches?
Yes. An item that carries a lot of value in one branch may be class C in another. Download one file per branch with its own sales and stock, and one for the whole business for central purchasing.
How do I calculate the damage rate in inventory?
Divide the value of damaged and lost goods by the current stock value. In the sample, SAR 1,540.00 ÷ SAR 74,942.50 = 2.1%, shown in advanced mode. The Damaged and lost sheet builds the value from the quantities and their reasons.
What is the difference between slow-moving and dead stock?
In daily use the terms overlap. Strictly, slow-moving stock still sells but with low turnover, while dead stock has not sold for longer than your limit. The template flags items past the limit in the Movement column and shows low turnover in the Turnover column.
What is the difference between slow-moving and damaged stock?
Slow-moving stock can still be sold but nobody is asking for it, so it is handled with a discount, a return or a purchasing stop. Damaged or lost stock can no longer be sold and is written off with an adjusting entry once the report is approved.