Implementing multiple criteria ABC analysis

This article presents the results of applying multicriteria ABC analysis to maintenance inventories. A large service organization and a consumer goods manufacturer participated in the study. The managers in both organizations used cost and noncost criteria for developing the ABC categories for inventory management. The study shows that managers can develop noncost criteria and classify the inventory items in ways that combine the criteria types. Specific policies were defined for managing the items in the industrial firm. Once the benefits of the methodology were demonstrated, a year-long program for implementing the system was developed. The project is estimated to cost less than 10 to 15% of the available storeroom clerk manhours and provide substantially greater benefits.