Long ago, I did a course in Materials
Management. While studying Inventory Control, I had to learn about ABC
Analysis. Materials are classified into three categories A, B and C. The most
valuable are classified as A. Those that are less valuable are classified as B
and the least valuable as C.
The A group materials are tightly
controlled so that there is no pilfering and only sufficient amount is held in
stock to avoid money being locked up as stock. There is less control for B
group materials and least control for C group materials. Some loss due to
pilfering can be tolerated for C group materials and the expense involved in
control can be reduced for this category.
I think ABC Analysis is useful in daily
life too. We keep expensive jewelry in a safe place. We focus on important
issues and deal with them effectively. Less important issues do not receive the
same attention. A salesman works hard to get a big order. He does not put as
much effort on a small order. We are more careful in selecting when we purchase
something expensive and may look for reviews. It is not necessary when we buy
something cheap.
