Ranking is a method of classifying products based on their relationship to other products in your inventory. It is used by your buyer to ensure that products that experience a higher volume of sales are ranked higher, and that replenishment controls are in place to make sure there are always adequate stock levels for the higher ranked products. When products are ranked, they are placed into three or more groups for the purpose of stock control and planning.
Each item in the warehouse is assigned a rank from A to E to represent that item’s relative impact on the warehouse operations. ‘A’ ranked items have the most activity (i.e. hits, orders, transfers, etc.), and ‘E’ ranked items the least. Called ABC ranking, these groups represent products ranked based on their sales “hits.” Hits are the number of times a product appears on a sales order, warehouse transfer, or lost business transaction, regardless of quantity. These are called line hits. By tracking a product’s line hits, you can rank a product by the volume of transactions it appears on. The percentage of hits is an item's sales “hits" divided by the total number of hits in the warehouse.
Ranks are calculated and assigned automatically each night.
There are many settings and controls that can be adjusted by an item’s rank. This allows the system to work more efficiently. We will cover each of the Rank-specific settings later in this document.
The products with the most hits are ranked as A items. A items generally represent a smaller group (15-20%) of products that result in around 75-80% of the annual demand. For the purpose of inventory control and replenishment, the greatest attention should be paid to these A-ranked products.
Products with fewer hits are ranked as B, C, D, and so on (up to 26), based on how your ranking levels are defined. Least attention is paid to the lowest ranks.
Threshold Minimum Rank for New Items
An item’s rank in the warehouse is used for multiple calculations and is an indication of how it compares to other items in the warehouse in terms of hits.
This setting applies to all new items setup in a warehouse. The new product’s rank will be set and remain fixed for the specified number of months from the date the item was established in the warehouse. Its rank will not be recalculated by the system. This setting is separate and distinct from the freeze rank setting. If an item’s rank is frozen, that frozen rank will always be used, even if it’s a new item.
Because newly-established items have little or no usage, the automatic ranking would immediately push them down to an E rank, causing the replenishment controls to stop most purchasing activity.
Previously this was countered by “mocking-up” usage for the item, but since Rank is now based on document hits, that process will no longer work.
Instead, you can establish a minimum Rank for new items and a number of months since inception that an item should be considered “new”. If FACTS calculates a rank lower than the T-Min Rank, it will override it and assign the T-Min. If sales of the item quickly take off, the Rank will increase as warranted.
After the item has been established for more than the specified # months, the T-Min Rank will no longer be applied.
| Rank | The rank that will be used for all new items in the warehouse |
| Number of months | The number of months the new item rank will be used. |
Rank refers to the activity level of an item in a particular warehouse. The rank values are from A thru E, with the A items being the faster moving items and E the slowest moving items.
Hits can be either document hits (i.e. the number of times an item appears on a document) or customer hits (i.e. the number of customers that purchased the item). The percentage of hits is an item's document “hits" divided by the total number of hits in the warehouse.
The Rank can be based on the hits for an item compared to the total hits in a warehouse. This Ranking method is a percentage based Rank. Alternatively, the Ranking method can be defined as a range of Hits. An item’s Rank will be derived from the number defined hits per Rank. An example of the setup for Rank by warehouse for each method can be view below.
| Rank | % of Hits |
| A | 80% |
| B | 15% |
| C | 4% |
| D | 1% |
| E | 0% |
| Rank | Hits |
| A | 50 |
| B | 25 |
| C | 15 |
| D | 5 |
| E | 0 |
The number of periods used in the calculation of Rank for items can be configured at the company or warehouse level. The default value is 12 periods of usage history for calculating an item’s Rank. This value can be adjusted depending on the preference required for the warehouse.
| Rank Type | Indicates the warehouse ranking type (P)ercentage or (H)its |
| Months Used to Calculate Rank | Number of periods to utilize usage information for Rank calculation. |
| Rank A | The number of hits or the percentage of hits for an item to be an A ranked item |
| Rank B | The number of hits or the percentage of hits for an item to be an B ranked item |
| Rank C | The number of hits or the percentage of hits for an item to be an C ranked item |
| Rank D | The number of hits or the percentage of hits for an item to be an D ranked item |
| Rank E | The number of hits or the percentage of hits for an item to be an E ranked item |
The settings for this section can be defined at the company, warehouse, or whse/item levels only.
See Also
Understanding Replenishment Values
Entering Rank Replenishment Parameters
Replenishment Parameter Maintenance Procedures
Replenishment Variables Calculations