Applying Pareto in the Warehouse

Applying Pareto in the Warehouse

 

The following table show how Pareto techniques may be useful when classifying the materials in the Warehouse, according to the amount of movements.

Product_code Annual demand        Picking frequency              Weighted volume        % weighted % weighted (cumulated) ABC Category
444                     200.000 18000          3.600.000.000 38,00% 38,00% A
333                     100.000 25000          2.500.000.000 26,39% 64,39% A
122                     100.000 10000          1.000.000.000 10,56% 74,95% A
222                       50.000 15000              750.000.000 7,92% 82,86% A
467                     800.000 850              680.000.000 7,18% 90,04% B
333                     600.000 1000              600.000.000 6,33% 96,38% B
572                     730.000 250              182.500.000 1,93% 98,30% C
744                     250.000 400              100.000.000 1,06% 99,36% C
895                     100.000 600                60.000.000 0,63% 99,99% C
321                       90.000 10                      900.000 0,01% 100,00% C
                  3.020.000            9.473.400.000      

Products or references classified as A are the ones that may be prioritised in the warehouse, as those products are the ones that have a bigger rotation (we shall locate those products closer to the pickup area), whilst C products shall be located in an passive area of the warehouse (and stored palletised or in containers, as they won’t have much demand along the year).

Considering the example, proceed to calculate the ABC category of the references of a car spare distributor. The data is located in ecampus in a spreadsheet named 2021-LogisticsPareto-Data.

You will have to upload the spreadsheet document with the classification of the items.