FSN Analysis
Last updated on 15/12/2023 0 By indiafreenotesFSN Analysis is a classification technique used in inventory management to categorize items based on their consumption patterns and movement within the inventory. The FSN Analysis categorizes items into three groups: Fast-moving (F), Slow-moving (S), and Non-moving (N). This classification helps businesses prioritize their inventory control efforts and resources based on the pace of item consumption and turnover.
Categories in FSN Analysis:
-
Fast-Moving (F) Category:
Items in the Fast-Moving category are characterized by high consumption rates and rapid turnover. These items are in constant demand, and their stock levels are depleted quickly.
Characteristics:
- High sales volume.
- Frequent replenishment.
- Short shelf life.
Management Approach:
- Tight inventory control.
- Frequent monitoring and reorder points.
- Efficient order processing to meet high demand.
-
Slow-Moving (S) Category:
Items in the Slow-Moving category have a moderate consumption rate and turnover. They are not as critical as Fast-Moving items, and their stock levels are relatively stable over time.
Characteristics:
- Moderate sales volume.
- Slower turnover compared to Fast-Moving items.
- Longer shelf life.
Management Approach:
- Periodic review and analysis.
- Adequate inventory control measures.
- Balanced stock levels to avoid excess.
- Non-Moving (N) Category:
Items in the Non-Moving category are characterized by low or no consumption. They have minimal turnover, and their stock levels remain relatively constant over an extended period.
Characteristics:
- Low or no sales volume.
- Rarely consumed.
- May be obsolete or have limited demand.
Management Approach:
- Minimal control efforts.
- Infrequent monitoring.
- Consideration for potential obsolescence.
How to Perform FSN Analysis:
-
Determine Consumption Patterns:
Identify the criteria for categorization based on consumption patterns, such as the rate of sales, turnover, or demand frequency.
-
Evaluate Items:
Evaluate each inventory item based on the chosen criteria to determine its classification into the Fast-Moving, Slow-Moving, or Non-Moving category.
-
Assign Categories:
Assign each item to one of the FSN categories based on the evaluation. For example, items with the highest sales volume and turnover may be classified as Fast-Moving, followed by Slow-Moving and Non-Moving items.
-
Implement Different Control Measures:
Apply different inventory control measures and management approaches based on the FSN category. Fast-Moving items may require more frequent and rigorous control compared to Slow-Moving or Non-Moving items.
Benefits of FSN Analysis:
-
Resource Optimization:
Helps optimize resources and efforts by focusing on items with different consumption patterns.
-
Efficient Inventory Management:
Guides more efficient inventory control strategies tailored to the pace of consumption for each item.
-
Cost Optimization:
Supports cost optimization by aligning inventory control measures with the characteristics of each category.
-
Risk Mitigation:
Identifies and mitigates risks associated with slow-moving or non-moving items, such as potential obsolescence.
-
Strategic Stock Planning:
Facilitates strategic stock planning to ensure that the inventory is managed appropriately based on the demand characteristics of different items.
Share this:
- Click to share on Twitter (Opens in new window)
- Click to share on Facebook (Opens in new window)
- Click to share on WhatsApp (Opens in new window)
- Click to share on Telegram (Opens in new window)
- Click to email a link to a friend (Opens in new window)
- Click to share on LinkedIn (Opens in new window)
- Click to share on Reddit (Opens in new window)
- Click to share on Pocket (Opens in new window)
- Click to share on Pinterest (Opens in new window)
- More