What is an ABC Analysis?

The ABC analysis is a form of concentration measurement. The automated form of the ABC analysis uses the so-called Gini coefficient to categorize a number of objects into three classes (A, B, and C) and to depict the results graphically via a so-called Lorenz curve.

The ABC analysis is frequently used in purchasing to differentiate the most essential, large-scale suppliers from the numerous smaller suppliers. We then refer to ABC suppliers.

They answer, e.g. the following question – which suppliers (A) handle 80% of the procurement volume, which and how many suppliers (B) represent an additional 15% of the volume, and which suppliers (C) handle just 5% of the volume?

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