ABC classification of the construction materials is the modern classification of the construction materials and is more scientific. It is based on the usage value of the construction materials for the inventory stock. The usage value refers to the product of the price and the quantity of construction materials.
This classification provides a scientific mechanism for the identification of the construction materials that have a significant impact on overall inventory cost as well as provides the systematic mechanism for identifying the different categories of stock that will require different policy settings and the inventory control. The primary objective of this classification of the construction materials is to manage the different stock items that are not equal in value or the order frequency.
ABC Classification of Construction Materials
1. A Classification
A classification includes the group of construction materials that have the highest inventory cost. These items are very important for the project. As the demand for these construction materials is high, frequent value analysis must be done. These construction materials are fast-moving and are the materials that drive the largest percentage of the target service levels and customer satisfaction rates. Numerically, 10% of the A items volume accounts for 70% of the total inventory value.
2. B Classification
B classification includes the group of construction materials that have the intermediate inventory cost. These items are lesser important than the A group items. The construction materials falling under this category have mid-range inventory value and order frequency. Numerically, 20% of the total volume accounts for 20% of the total inventory value.
3. C Classification
C classification includes the construction materials that have the least inventory cost. These construction materials are only marginally important. The items of this group have low order frequency and high inventory value. These construction materials are mostly stocked with very low quantities or not at all due to the high carrying costs associated with the stock levels. 70% of C items volume account to 10% of the total inventory value.