Gviniashvili T. Z., Zlydnieva V. Yu.
Oles Honchar Dnipropetrovsk National University (Ukraine)
AN IMPROVEMENT OF STOCKS MANAGEMENT
BY MEANS OF ABC ANALYSYS
In the modern terms every enterprise keeps stocks. A term «stocks» represents characteristic properties of material elements of production. We suggest to use the next specified determination: stocks are part of material resources of enterprise, that presented by a whole objects of labour, that are at an enterprise as raw materials, materials, purchasing semi-finished products and component parts, fuel, containers and packing-case materials, building materials, spares and other materials, that make material basis of products of enterprise, give to it necessary qualities, take part in a production during one productive cycle and fully carry the cost on the cost of the prepared products.
Unlike existing definitions, proposed concept «stocks» emphasizes material and costly nature of inventory, at the same time separating them from the total consumers, determines compensation of its value source.
Stock managing is crucial in both technological and financial aspects. In our view, stock management should ensure optimal between expenses, stock demands production and customer satisfaction. During the formation of the company stocks may be such a problem, as choice of the most effective stock management system. We propose to consider such management systems, as ABC analysis.
ABC analysis can not only explore the production spectrum, but also to explore the rating of products covered by these criteria, as well as identify the portion of the range that ensures maximum effect, and determines the relevance of the chosen research topic.
ABC analysis is based on the Pareto rule. According to it, 20% of production spectrum provides 80% of the profits. Usually 10% of production spectrum (group A) give 80% of turnover; 15% – (group B) give 15% of turnover; 75% position range (group C) give 5% of turnover.
According to this rule, the entire range of production spectrum can be divided into groups in order of importance:
1. Group A – important goods that should always be present in the range. In this group are best sellers in production spectrum. If a parameter used is analyzing of extra charge, this group will include the most profitable products;
2. Group B – products of secondary importance and significance, may be replaced by substitutes;
3. Group C – the least important products, is to exclude applicants from the production spectrum and novelties [3, p. 270-272].
The first step in realization of ABC analysis is to determine targets. If the goal is to reduce the range, amount of sales and profit are main indicators. If the goal is to identify and reduce the costs of maintaining stocks, inventory turnover and occupied storage capacity are chosen as main indicators. If you want to explore the profitability, the chosen indicator is the main factor of turnover, profitability. ABC data analysis helps optimize production spectrum.
According to advantages of this type of analysis, there is one significant drawback: this method does not assess the seasonal fluctuations in demand for goods.
Let’s summarize the benefits and drawbacks of this method of analysis.
Benefits:
1) Easy to use. This method can be adapted to different situations.
2) Transparence. This advantage comes from the simplicity. The simpler method is safer and clearer. Phase analysis can be traced and, if necessary, corrected. Interpretation of payments does not cause problems.
3) The universality. Using the ABC method can analyze anything that is divided into components.
4) Automation. Calculation problem lost its relevance. Calculation in Excel can be done with just a few keystrokes. There are also many specialized programs, macros and applications that reduce the number of clicks. ABC analysis can be done quickly.
5) Optimization of resources. It allows you to cut and release a huge amount of time and manpower. This is achieved by focusing the work on the most important elements and vice versa, saving resources for less priority components [1].
ABC analysis, as well as any other statistical methods is a tool in the hands of the analyst. Analytical methods should also be able to use. The advantages of this method can be read in a lot of publications.
On the negative points should be noted first of all that the ABC grouping, not always correctly puts priorities. Multivariate analysis of ABC-number of elements in group A may be significantly more than 20%. ABC-analysis makes it impossible to recognize the quality and nature of the data, it should be done by analyst.
Despite the advantages and disadvantages we believe that the usage of this method has practical value for each company.
ABC analysis method helps to classify resources according to their importance, pay attention to details and do more accurate and qualitative data analysis.
We believe that this analysis should be used for better stock management, because it provides an opportunity to simplify control, focusing on a defined number of positions that are scarce or too expensive.
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