ABC analysis is a popular technique to understand and categorize inventories. Imagine you are handling inventory at a plant that manufactures high-end super expensive cars. Each car requires several parts (4,693 to be exact) to assemble. Some of these parts are very costly (say few thousand dollars per part), while others are cheap (50 cents per part). So how do you make sure that your inventory tracking efforts are optimized so that you waste less time on 50 cent parts & spend more time on costly ones?
This is where ABC analysis helps.
We group the parts in to 3 classes.
- Class A: High cost items. Very tight control & tracking.
- Class B: Medium cost items. Tight control & moderate tracking.
- Class C: Low cost items. No or little control & tracking.
Given a list of items (part numbers, unit costs & number of units needed for assembly), how do we automatically figure which class each item belongs to?
And how do we generate below ABC analysis chart from it?
That is what we are going to learn. So grab your inventory and follow along.
(related: ABC Analysis page on Wikipedia)
ABC Analysis using Excel – Step by step tutorial
1. Arrange the inventory data in Excel
Pull all the inventory (or parts) data in to Excel. Your data should have at least these columns.
- Part Name
- Unit cost
- # of units (if this is blank, just type 1 in all rows)
Once the data is in Excel, turn it in to a table by pressing CTRL+T. Lets call our data as inventory. You can set the table name from Design tab.
(Related: Introduction to Excel Tables)
2. Calculate extra columns needed for ABC classification
Now comes the fun part. Crunching the inventory data with formulas. Yummy!
Total Cost: This is just a multiplication of unit cost & # of units columns
Rank: We need to figure out what rank each total cost is (in the total cost column). We can use RANK formula for this.
=RANK([@[Total Cost]],[Total Cost],0) will tell us the rank for each total cost.
Cumulative Units: Once we know the rank of each item, next we need to figure out how many total units are needed for items ranked less or equal.
For example, The number (#) of the third part (PT3959-waes) is 3. Cumulative units for this is 91. This means, 91 is the total number of units for first three ranked parts (parts # 8, 9, and 16).
The formula for this is, =SUMIFS(['# Units],[Rank],"<="&[@['#]])
Remember, [@[‘#]] refers to running numbers (1,2,3….4692,4693)
Cumulative Units %: This is a percentage of cumulative units in total. The formula is simply,
=[@[c Units]]/MAX([c Units])
[Related: using structural references in Excel – video]
Cumulative Cost & Cumulative Cost %:
These are similar calculations (instead of units, we calculate cost)
Explanation of these calculations:
See below animation to understand how the numbers are crunched.
3. Create Inventory Distribution Chart
Select cumulative units & cumulative cost % columns and create an XY chart. Make sure cumulative units is on horizontal (X) axis and cumulative cost % is on vertical (Y) axis.
Our curve should look something like this.
4. Set up ABC classification thresholds
Now we need to decide what is the threshold for classes A,B & C.
For most situations, Class A tends to be top 10% of the items.
Class B would be next 20%
Class C would be the last 70%.
But these numbers may change depending on your industry, manufacturing settings.
Lets say, some where in our spreadsheet, user has defined the thresholds for the classes in a range like this:
So $O$7:$O$9 contains the thresholds.
Next to this range, calculate additional numbers (for plotting A, B & C markers and boxes) like this:
Examine the download file for exact formulas.
5. Add the ABC items & % total cost columns to chart
Add the extra data to the chart (by right clicking on chart and going to select data box & clicking “Add” button).
Once the new series is added, make sure you format it as markers only so that we get something like this.
6. Add Error bars to the ABC markers to get boxes
This step involves adding error bars to ABC marker series and customizing them.
In Excel 2013: Add error bars by clicking on the + button next to chart
In earlier versions: Do this from layout ribbon
Once error bars are added, customize them (select and press CTRL+1). Set error amount to Custom and select the calculated error values as shown below.
Once added, format the error bars to show no cap and change line color to something pleasant.
Now we have boxes on the chart.
7. Clean up the chart, add labels & titles
This is where get creative. After some clean up, we can arrive at something like this.
Download ABC Inventory Analysis Template Workbook
Click here to download ABC Inventory Analysis workbook. It contains sample data & chart. Examine the formulas & chart settings to learn more. Or if you are in a hurry, replace the sample data with your inventory details and get instant results.
Do you use ABC analysis for inventory tracking & control?
I will be honest. I have never worked as inventory controller in a super-car manufacturing plant. That said, I run a business and we do have inventory. Not physical but digital inventory. So I often use analysis like ABC or pareto to quickly figure out where I should focus my efforts.
What about you? Do you use techniques like ABC analysis to narrow down to a few items that matter most? How do you do it in Excel? Please share your tips & experiences using comments.
Add few more techniques to your inventory
Feeling low on your Excel skills inventory? Stock up with below goodies.
- Pareto Analysis in Excel – How to & tutorial
- Analyzing competition using charts – case study
- Track employee vacations & productivity [dashboard & tutorial]
- Track annual goals & achievements
23 Responses to “Displaying Text Values in Pivot Tables without VBA”
Its possible to display up to 4 text values.
Have a look at the screen shot of an example that I had posted way back at the EHA and figure out how its done !
http://tinypic.com/r/muzywk/6
With Excel 2010 you can use Conditional Formatting to apply custom number formats which can display text. (In older versions you can only modify text color and cell background color, but not number formats.) Using CF allows for an even larger number of different display values.
[...] Display text values in Pivot Tables without VBA [...]
Hey,
Thanks, this helps. But how do you do it for multiple values where there is a huge amount of non repeating text?
@Soumya
The only way to do more than 4 values is to make the Pivot Table manually with formulas, of course then it isn't a Pivot table
You can of course do it with VBA
You may want to have a look at this description of how to do it here: http://www.clearlyandsimply.com/clearly_and_simply/2011/06/emulate-excel-pivot-tables-with-texts-in-the-value-area-using-vba.html
@Soumya
The only way to do more than 4 values is to make the Pivot Table manually with formulas, of course then it isn’t a Pivot table
You can of course do it with VBA
You may want to have a look at this description of how to do it here: http://www.clearlyandsimply.com/clearly_and_simply/2011/06/emulate-excel-pivot-tables-with-texts-in-the-value-area-using-vba.html
[...] Pivot Tables take tables of data and allow the user to summarise and consolidate the data at the same time. This is a great and very fast method of analysis but is restricted to handling mathematical functions on the value field resulting in numerical summaries. – read more [...]
[…] Read more here: Displaying Text Values in Pivot Tables without VBA […]
There is a very good way actually for handling text inside values area.
First you create a special column on the very left side and call it ID, and put unique ID (numbers only), and then create a pivot table with:
Row Labels and Column labels as you like, and in the Values labels use the unique ID number.
Move the unique ID number (copy paste) somewhere to the right and use vlookup to load the data you need using the ID as reference.
It is a bit longer way but for me it works perfectly to combine values as you like in any moment.
hope helps.
Regards,
Jon
Thank you! I finally understand pivot tables thanks to your clear, concise explanations and examples.
Good Day. This is exactly what i have been looking for. However when i try it on my pivot table or even when i try to recreate this exercise using the sample worksheet, i get this error:
"Microsoft Excel cannot use the number format you typed. Try using one of the built-in number formats."
Same thing here, Excel quite did not like the format in my PowerPivot. Any clues as to what may be going on? Thanks.
I have the same thing happening on my end. I'm running a normal pivot table on a .xlsm file.
@Danzi
What format did you use?
can you post the file ?
pls. help in table there is name, pan. amount. i have to make pivot table for example
NAME PAN AMOUNT
MR.X AAAAC1254T 500.00
MR.Y AAABR1258C
MR.A CFVDE2458T
MR.Z AAVCR12548C
MR.X AAAAC1254T
MR.Z AADCD245T
pls. help in table there is name, pan. amount. i have to make pivot table for example
NAME PAN AMOUNT
MR.X AAAAC1254T 500.00
MR.Y AAABR1258C 1000
MR.A CFVDE2458T 2000
MR.Z AAVCR12548C 5451
MR.X AAAAC1254T 45564
MR.Z AADCD245T 4500
how to get pivot tabe so i get PAN no. against Name.
I found an easy way to get text values in pivot table.
I create an other worksheet in wich each cell has a formula that copy the pivot table. The trick is that the formula does a lookup for the numbers in the pivot table.
The formula looks like that:
=IF(ISNUMBER(table!A1);VLOOKUP(table!A1;Code!$A$1:$B$65;2);IF(ISBLANK(table!A1);" ";table!A1))
Code is a worksheet where there is a liste of text /numbers correspondance.
As a bonus The new sheet is easier to format
Additional trick:
In my case, i encoded differents codeid with a power(2, codeId-1) so that summing then is equivalent to concatenate them.
1-A
2-B
4-C
8-D
yields :
5 - AC
14 - BCD
Hi
I want to ask if pivot can display dates in pivot field. As in a column i have customers and in row different items i want to know there last purchase date. anyone help in this??
Hello Guys, Need your help
I am doing some analysis of the cycle time of the product i.e how much time a product takes from manufacturing to the central warehouse.
I have batch numbers for the product and against them i have to pull out the diff. dates
Like the base date is from where the manufacturing start. So i have the batch number,against it's manuf. date. Now i have to pull out the date when it was quality released.
I have the quality released data but the data have duplicates, like i will have two dates or may be three for the same batch. So my main objective is to pull out the date which is latest among them.
BATCH NO. DATE of Mfg. DATE of Quality release
A1 12/4/2014 (HERE I HAVE TO PULL value)
Next Sheet
BATCH NO. DATE of Quality Release
A1 14/5/2014
a2 23/5/2016
A1 12/5/2014
A1 13/6/2014
From this sheet i have to pull up the latest date format of date here is dd/mm/yyy
TIA
[…] needed to present text instead of counts in a pivot table value column. Here is an excellent resource for Excel manipulation, in addition to an overview of pivot […]
This is great thank you.
Wow!!! Excellent!! It helped me a lot.
I am developing training tracking sheet for 200 employees with training completed date. Each employee will be attending 25 courses. How to indicate actual dates in pivot table value field.