Explanation: XYZ-analysis

XYZ-analysis is a procedure used in logistics, procurement and materials management. Goods and parts are divided into classes based on their expected consumption in order to determine an ordering action cycle. XYZ-analysis can be used to carefully plan material requirements as well as to determine storage modalities.

In industry and logistics, Waste has never been a trend. Everything is optimally planned and produced in a timely manner. Waiting for material, production delays and far too much stock are things that cannot be found in any good and presentable balance sheet. In this respect, many companies also use the XYZ-analysis in conjunction with the ABC-analysis in Industry 4.0. In the XYZ-analysis, the goods or parts to be stored are first divided into the classes 'XYZ' according to consumption. This makes it possible to plan requirements, assess safety reserves and identify those items that require a high level of monitoring.

X' defines the category of goods that has a constant regular consumption with only minor fluctuations. It signals a high degree of accuracy in foresight, i.e. it can be planned well.

Category 'Y' is subject to greater fluctuations than 'X', for example during a season or in fashion. Its consumption is in the middle range. Here, it is advisable to have an appropriate stock. 

Z', on the other hand, defines a category of goods that indicates very irregular consumption and low foresight in consumption. This category is problematic and difficult to survey, so buying as needed and stocking up applies here.

Class 'X' must be ordered just in time, 'Y' class, on the other hand, should be in stock, while class 'Z' can at best be procured in small quantities or even only individually on demand. Often the XYZ-analysis divides the consumption into percentages of 50, 20 and 30. These values are taken as the basis for calculating orders.

But how are the classes delimited in the first place? Is it done arbitrarily? - No! In XYZ-analysis this is done by evaluating the turnover rate of certain goods within a certain period of time, based on the coefficient of variation (CV). It results from the mean value of the consumption of a good or piece within a period and its deviations and thus shapes the number of goods that have to be procured in the different stages. The longer the period under consideration, the higher the accuracy of the forecast. Consumption must be determined and booked promptly because larger collective bookings change the data. In addition, seasonal trends have to be taken into account because they are reflected differently in the years.

A lot of things come together here, but XYZ-analysis is a way to streamline processes in order to gain a competitive advantage in an entrepreneurial world full of competition, specialisation and digitalisation. It is often combined with ABC-analysis in this context. Over time, this interaction results in a suitable ordering rhythm that optimises storage and ties up little capital. In this way, the term 'Waste' becomes a foreign word, so to speak.

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