ABC Class Codes are used in the following scenarios:

• Every product is assigned a Class Code. This code is used throughout the system to allow the restriction of reports to selected product classes.

• Establishes Percentage breaks at which the system automatically calculates and resets the Class Codes when Report & Reset Class Codes (IM61) runs. Items are sorted in descending order of dollar value demand or number of hits. Enterprise provides many other reports that can be configured to report product information by Classification.

  For example, once the reclassification has completed via IM61 with the 'Inventory Master Update' option, you may wish to produce a Invenotry Evaluation Report (IC81) of products restricted to the lowest of your defined Classifications and with the Print On-Hand > 0 option selected. This type of report is a practical tool for identifying and managing dead stock.

• If you are using the Class Code to replenish products, then this table is used to set the number of days of forecast demand for use in the calculation by Forecast, Purchasing, Lead--time Recalculation (PO25) program.

• The Company Control Initialization (CC00/Inventory Control) program references this table to identify the classification codes for which stock depletion checks are performed in Enter Orders & Quotes & Enter Invoices, Direct Bills & Credits programs. The stock depletion check causes a warning message to appear during Order Entry in OE30, or during Invoice Entry or Direct Bill entry in IN41 (Enter Invoices Direct Bills and Credits) if the quantity placed on the order causes the product’s available stock to fall beneath the minimum quantity by at least one half of that minimum.

  For example:

  Product ABC has a minimum quantity of 50, and there are currently 75 pieces of this product in the warehouse.

  When an order for 60 is entered for this item, the available quantity will fall to 15 pieces, which is less than half of the minimum of 50.
  

  The purpose of this warning message is to immediately identify to customer service people, or warehouse staff that an item has fallen below the minimum quantity, and that a significant portion of that minimum (also known as Safety Stock) has already been allocated to customer orders. Because this message appears, the person entering the order or invoicing the delivery is now able to call the attention of the purchasing agent to this potentially low stock level, and thus perhaps avoid stock-outs on this product.

  Caution: It is not advantageous to force this message to appear every time a product’s available quantity falls below this level. Operators who see the same re-occurring message too frequently are likely not to give the message any importance. By selecting a higher classification for this check/message, the operator will only be presented with the warning for products where it makes sense to draw someone’s attention to the situation. Note: This check is not performed in program RS41 (Enter Cash Counter Invoices).
  

• One method used for inventory control is the ABC Classification method. Products are classed according to their demand. For example, if the top 10% of the number of products accounts for 60% of the total dollar value of product demand, any products falling within this 10% would most likely be classed as A products.

  If the ABC Classification Method of calculating ROQ’s ( reorder quantity) is not being used, this table should still be maintained in order to facilitate the stock depletion protection routines performed by the Enter Orders & Quotes & Enter Invoices, Direct Bills & Credits programs. For example, if products are classed as A through G, it may be desirable to maintain stock depletion protection checks for only those products classed A through D. In this example, the lowest class to be checked for stock depletion protection, per the Company Control Initialization (CC00/IM) program, would be D .

  If you specify a Purchase Criteria for a class of items, it will be used by the Report & Reset Class Codes program. The purchase criteria code will be updated in the purchasing master based on the class code of the product. For example, if you wish to have slow moving items designated as class C and you assign the Eco method to this class, all items that are assigned class C as a result of the recalculation will be automatically switched to the Eco method.