Runners, Repeaters, & Strangers ABC classification of Inventory

The sterile and clinical approach to classifying and categorizing your inventory is to sector it with an A, B, C, designation. Personally, I find this extremely boring and find that replacing the ABC classes with "Runners, Repeaters and Strangers" resonates much better with the masses.

I would also encourage you to push the classifications beyond Inventory classification into how you physically manage and organize your operation. First, let us frame our mind around the classifications,

ABC inventory analysis involves grouping your products into three categories based on their usage value—the total number of units sold (or used) in a given period, multiplied by the cost per unit.

• A items: 10%–20% of your inventory, accounting for 60%–80% of your annual consumption value

• B items: 20%–30% of your inventory, accounting for 20%–30% of your annual consumption value

• C items: 50%–70% of your inventory, accounting for 5%–15% of your annual consumption value

• A items: Your company’s most important products. This category usually includes items with high sale volumes, high costs, or both.

• B items: Less important items. These products may not sell as quickly as A-level items, or they may be cheap to produce.

• C items: The least important items in your inventory. This category is the largest of the three, but it makes up the smallest portion of your business’s total inventory value.

The following are my interpretations of transitioning ABC into "Runners, Repeaters & Strangers" ...

FREQUENCY

RUNNERS - seen daily

REPEATERS - seen monthly

STRANGERS - seen quarterly or less

KNOWLEDGE ABSORPTION

RUNNERS - Memory and muscle memory

REPEATERS - Memory and verification through documentation

STRANGERS - Work Instructions, Drawings and Specifications

SPEED

RUNNERS - Fast, little attention required (at rate)

REPEATERS - Moderate, verification against documentation (70-80% of rate)

STRANGERS - Slow and meticulous, closely following instructions (50% of rate)

LOCATION

RUNNERS - access in less than 30 seconds

REPEATERS - access in less than 2 minutes

STRANGERS - access in less than 15 minutes

MARGIN

RUNNERS - Target Margin

REPEATERS - Target Margin = 50%

STRANGERS - Double or Triple Target Margin

FUFILLMENT

RUNNERS

Typically what I have witnessed is that the purchase of a RUNNER is an impulse purchase. If you have stock or can provide immediate fulfillment you will get the sale, however, you also most likely have a plethora of competitors, so if you cannot fulfiill your customer will switch, hence, minimal to no brand loyalty.

REPEATERS

Often a RUNNER with some additional options. The customer is willing to wait slightly longer to obtain a specialized solution, but not much longer.

STRANGERS

You will have delivery latitude, since your customer is anticipating a customized solution specific to them. They are willing to wait longer and expect to pay more for this customization.

SCHEDULING

It becomes important that you build your schedule with the same percentages used for your categorizations. This makes your cash flow more predictable, but keeps moral up with your workforce. If you load your schedule with "STRANGERS" it is very possible that your workforce will be demoralized since they cannot hustle and feel like they had a good and productive day ... you are better to spread out the production of STRANGERS across several days.

My suggestion is that you create a matrix using the above categories and see how your facility aligns to the matrix and then make the necessary adjustments to optimize.