How to use ABC analysis for warehouse management

The ABC analysis for the warehouse is used for inventory management and maximization of inventory productivity. A mathematical method that allows you to analyze the data and identify the strengths and weaknesses of your storage.

A well-stocked warehouse is the key to keeping a large number of customers happy. But warehouse management involves high costs and knowing how to manage unsold items, transforming stocks into productive resources, is indispensable for any commercial activity.

Inventory performance can be measured with different methods and tools: one of them is ABC analysis which, when applied properly, can increase inventory profitability and optimize investments.

What is ABC analysis?

The ACB analysis is a scientific method applied to the warehouse for the analysis of data on stocks and their productivity in a given period of time. Basically it serves to identify the most profitable products for the commercial activity and those that, on the other hand, only produce costs.

This analysis is based on the Pareto Principle , or 80/20 rule, which states that 20% of the causes are sufficient to cause 80% of the effects. To use this method, you have to classify your inventory into 3 categories based on your overall turnover.

The three categories of the ABC inventory analysis

Group A : “ money maker ” section of the warehouse, that is the part of items, usually in a reduced percentage, that produces the largest part of the revenue. Since stocks are of greater value, they must be safeguarded and valued.

Group B : warehouse items with an intermediate value, which generate around 15% of turnover and which can fluctuate, depending on market demands, between category A and category C.

Group C : are the unproductive stocks, the stocks that represent just 5% of the turnover.

What is ABC analysis for?

Being able to optimize investments in the warehouse means finding a profitable balance between available items and procurement costs . The ABC analysis is used to study stocks from the point of view of their performance. The advantages are obvious:

Customer Satisfaction : If stocks of the most popular products run out, you lose sales and customers. The latter will in fact look for the item from competitors and could become regular buyers.

Save money : unproductive stocks have high costs, because they must be managed and take up space in the warehouse. If they are perishable materials, the risk is to lose the capital invested.

Does ABC analysis work?

ABC analysis is one of the possible metrics to be applied for inventory analysis. There are also others, based on the frequency of sale or on the movement of a variant, the results of which can be cross-referenced to offer a comprehensive overview. Furthermore, the ABC analysis has some shortcomings that make it necessary to resort to other integrative tools, also based on artificial intelligence . Here are the most obvious ones:

It does not consider seasonality : some products are subject to peak demand such, during certain periods, as to justify a transition from group B to group A.

It does not apply to products in the launch phase : no performance history is available for new items, for which it is advisable to wait a few months before assigning them an inventory category.

Optimize sales and profits with group A

Finally, let us dwell on group A of the ABC analysis, which is the one that produces 80% of revenue. How is its management optimized? Here are some tips for doing this:

Strengthen the supply chain

The supply chain is vital. In order to always have the supply under control, it is advisable to create a solid and trusting relationship with the main supplier . Which should not preclude the possibility of buying from others, on the contrary! Having a back-up supplier means you don't run the risk of out of stock.

Monitor stocks

The monitoring of group A allows the commercial activity to satisfy customer demand thanks to the availability of the most requested and therefore more performing products. But how are stocks kept under control? One of the most functional approaches is to identify the reorder point, which is the one that indicates the lowest amount of inventory before the necessary replenishment.

A useful data both to keep the stock at the optimal level and to automate the purchasing process.

Investing in group A

The items in stock in group A are the best performing ones, therefore it is obvious to concentrate a large part of the investments on them, for example by ordering a larger quantity to be ready for peak demand. This step can trigger a further virtuous mechanism: if the demand increases, it is possible to gradually increase the prices of the items and have a greater profit margin.

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How to Write Long-Form Content

 

What is a long-form content / article and how should it be written? Do you need to include it in your content strategy? Find out all the details on the PMI Blog.

The long-form was cleared in 2016 by a study that later became historic. An analysis of one million search results found that longer content tended to rank higher in search results. What does the study teach? That the full content significantly outweighed the superficial content.

There is therefore a correlation between the length of the content and its positioning , which is why it is important to understand what a long-form is, how it should be written and why it is important to include it in your strategy.

What is a long-form

There are actually several definitions to explain what a long-form is. Some people define articles longer than 700 words as “long-form” , while other schools of thought believe that an article must exceed 1,800 words to be defined as such. For reasons of argument, we tend to standardize the concept of long-form with articles of about 1200 words or more .

In a nutshell, the long-form is simply a well-written article and of the length necessary to thoroughly investigate a topic that stands out from short-form content .

The advantages of a long-form

There are at least five benefits to be gained when publishing a quality long-form article:

It positions you as an expert in that subject, becoming a topic of interest to your customers and potential customers. When people have a question about a topic, they tend to turn to experts (in this case you)

Longer posts rank higher on search engines and are therefore more visible online

People are more likely to engage with long-form content, so they will spend more time on your site . If you then include relevant internal links within the content, they are likely to view more pages. This behavior has a positive impact on indexing

Longer pieces get more social shares . There are several studies and statistics that confirm this

More comprehensive content gets more inbound links , and these links play a central role in indexing

How to write long-form content

Once you understand what a long-form is and all the benefits it can bring to your company website or blog , it's time to figure out how to write it.

Choose the right topic

It is crucial to choose a topic of interest to your audience . Talk to your team and try to understand what customers want, check your analytics to see which posts have performed well in the past, and use Google Trends and related searches to gather more ideas. Do a keyword research to get more information on what people are trying to find. Make sure your idea isn't too general and try to figure out if you can write about it without getting boring.

Beat the competition

You don't have to create content that is better than anything else you can find on the web: you just "create" content that is better than your competitors' . Do you want to get feedback and become relevant? The only solution is to beat the competition. To do this, you need study, competition analysis and text optimization.

Collect information strategically

Depending on the topic, you can collect information in multiple ways:

·         Talk to customers about their needs

·         Talk to your team members about customer needs

·         Collect customer testimonials and reviews

·         Propose polls

·         Use google analytics to discover trends

·         Study what your competitors say on the subject

Quality long-form content is therefore a mix of information gathered through primary sources (original interviews, surveys, studies) and secondary sources (what has already been published).

Pay attention to the details

It's often the details that make the difference - don't forget to use lots of subtitles for people who need to analyze the content and read only a few sections. Optimize the article and tags in a way that reads naturally, carefully correct any errors and make sure all links work.

What is the most compelling title? Use external tools to find out which types of headlines have worked well for the type of post you are writing. Ideally, a title should contain a keyword often used by your audience.

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