ABC/XYZ Analysis

ABC/XYZ analysis is a method of grouping planning objects (characteristic value combinations, SKUs) based on
their value (revenue or sales volume) and dynamics of consumption or sales. During the analysis, the planning
objects are assigned one of the classes of ABC and XYZ simultaneously.
Analysis based on value (ABC analysis) can be done by applying Pareto's rule on the value of individual items in a
specific time horizon. The analysis ranks planning objects according to their value contributions in terms of sales or
contribution margin.
Analysis based on the dynamics of consumption (XYZ analysis) means the calculation of a variance coefficient of
consumption or sales in a specific time horizon. For example, a planning object that has the values BY might mean a
planning object with medium volume, and trend or seasonal demand.
To use this function, you must activate the business function SCM-APO-FCS, Events and Outliers, Causals,
ABC/XYZ Classification (SCM_APO_FORECASTING_1). For more information, see SCM-APO-FCS, Events
and Outliers, Causals, ABC/XYZ Classification.
ABC Analysis
You perform an ABC analysis to classify planning objects according to their usage value, or number of objects.
During ABC analysis, the system assigns each object one of the following indicators:
A - The most value, or given number of objects that produce the greatest value
B - Less value, or given number of objects that produce less value
C - The least value, or given number of objects that produce the least value
XYZ Analysis
You perform an XYZ analysis to classify planning objects according to the variance in a specific coefficient. During
XYZ analysis, the system assigns each object one of the following indicators:
X - Very little variation
Y - Some variation
Z - The most variation
Process
Each of the above groups should be treated differently in forecasting. The system must use a different forecast
profile for a planning object with little value and high volatility (CZ), than a planning object with high value and low
volatility (AX). The system selects the best forecast profile for each class based on the following process:
1. You assign two planning levels to the planning area you use for ABC/XYZ classification, one planning level for
ABC classification, and one for XYZ classification. The planning level of ABC classification can be an
aggregated level compared to the planning level used for XYZ classification.
In Customizing for Advanced Planning and Optimization, under Supply Chain Planning Demand Planning
(DP) Basic Settings ABC/XYZ Classification Specify Planning Levels for ABC/XYZ Classification , you
assign planning levels to the planning area you want to work with. You can specify planning levels in
Customizing for Advanced Planning and Optimization, under Supply Chain Planning Demand Planning
(DP) Basic Settings Specify Planning Levels .
Caution
You cannot assign navigation attributes to the planning levels that you want to use in ABC/XYZ classification.
2. You create an ABC analysis profile for classifying your planning objects into A, B, and C classes.
You can do this on the SAP Easy Access screen, under Advanced Planning and Optimization Demand
Planning Environment Demand Planning Worklist , in the ABC Analysis Profiles queries. For more
information, see Configuration Settings for ABC/XYZ Classification.
3. You create an XYZ analysis profile for classifying your planning objects into X, Y, and Z classes.
You can do this on the SAP Easy Access screen, under Advanced Planning and Optimization Demand
Planning Environment Demand Planning Worklist , in the XYZ Analysis Profiles queries. For more
information, see Configuration Settings for ABC/XYZ Classification.
4. After you have specified the criteria based on which the system should segment your planning objects into A, B,
C, and X, Y, and Z classes, you define the classification profile, which contains both the ABC and the XYZ
analysis profiles, as well as the composite forecast profiles you want the system to use for each class
combination.
You create classification profiles on the SAP Easy Access, under Advanced Planning and Optimization
Demand Planning Environment Demand Planning Worklist , in the Classification Profiles queries.
You create composite forecast profiles on the SAP Easy Access screen, under Demand Planning
Environment Maintain Forecast Profiles , on the Composite Forecast Profiles tab page. For more information,
see Creating a Composite Forecast Profile.
You then assign a composite forecast profile that contains forecast profiles that best match the combination of
ABC and XYZ classes to each class combination. You can do this on the SAP Easy Access screen,
under Advanced Planning and Optimization Demand Planning Environment Demand Planning Worklist ,
in the All Classification Profiles queries. For more information, see Configuration Settings for
ABC/XYZ Classification.
5. You run the ABC/XYZ Classification and Forecast Optimization report.
For more information, see ABC/XYZ Classification and Forecast Optimization.
6. You display the classification results, and change them, if necessary.
On the SAP Easy Access screen, choose Advanced Planning and Optimization Demand Planning
Environment Display ABC/XYZ Classification Results . For more information, see ABC/XYZ
Classification Result Display.
7. You can display the planning objects that belong to the different classes in interactive demand planning, by
specifying the XYZ planning level in the Show field of the selection window, and selecting the class you want to
display.
You can also save the selections you create using the different classes and use them in other applications, for
example in forecasting, or the Automatic Outlier Detection and Event Generation report.

Configuration Settings for ABC/XYZ
Classification

You use this function to set up ABC and XYZ analysis profiles, combine them into classification profiles, and
assign a composite forecast profile to the classification profiles. The system uses the composite forecast profiles to
determine which forecast profile is best suited for a specific combination of ABC and XYZ class.
The system uses the settings you make here in the ABC/XYZ Classification and Forecast Optimization report. For
more information, see ABC/XYZ Classification and Forecast Optimization.
Prerequisites
You can make configuration settings for ABC/XYZ classification in the ABC/XYZ Configuration queries of
theDemand Planning Worklist. For more information, see the Prerequisites section of the Demand Planning
Worklist documentation (see Demand Planning Worklist).
To use this function, you must activate the business function SCM-APO-FCS, Events and Outliers, Causals,
ABC/XYZ Classification (SCM_APO_FORECASTING_1). For more information, see SCM-APO-FCS, Events and
Outliers, Causals, ABC/XYZ Classification.
Features
Creating, Editing and Deleting ABC Analysis Profiles
ABC analysis profiles combine information about the A, B and C classes into which you want to segment the
planning objects that belong to one planning area.
You can create, edit and delete ABC analysis profiles in the ABC/XYZ Configuration All ABC Analysis
Profiles query of the Demand Planning Worklist, as follows:
To create an ABC analysis profile, click the All ABC Analysis Profiles link and choose New. In
theOverview view, specify the planning area you want to use, the name of the analysis profile, the source key
figure, where the system should take the data from, and the criterion based on which you want the system to
classify the planning objects.
In the ABC Classes view, specify the A, B, C classes and the values you want the system to consider for each
class.
Note
You can specify additional classes, for example class D, E, and so on.
To edit an ABC analysis profile, click the All ABC Analysis Profiles link and choose the Refresh link in the
lower right corner of the screen. The system loads the existing ABC analysis profiles, which you can edit by
clicking the link in the ABC Analysis Profile column, and choosing the Edit pushbutton in the window that
opens.
To delete an ABC analysis profile, select the row of the profile, and choose the Delete ABC Analysis
Profilepushbutton. You can delete multiple ABC analysis profiles at the same time.
Creating, Editing and Deleting XYZ Analysis Profiles
XYZ analysis profiles combine information about the X, Y and Z classes into which you want to segment the
planning objects that belong to one planning area.
You can create, edit and delete XYZ analysis profiles in the ABC/XYZ Configuration All XYZ Analysis
Profiles query of the Demand Planning Worklist, as follows:
To create an XYZ analysis profile, click the All XYZ Analysis Profiles link and choose New. In
the Overviewview, specify the planning area you want to use, the name of the analysis profile, the source key
figure, where the system should take the data from, and the criterion based on which you want the system to
classify the planning objects.
In the XYZ Classes view, specify the X, Y, and Z classes and the values you want the system to consider for
each class.
You can specify N and O classes as well. A planning object belonging to an N class is a new object with
historical data for fewer periods than the number of periods you specify in the N Periods field. A planning object
belonging to an O class has no historical data for at least the number of periods you specify in the O
Periods field. The system does not forecast with O classes, therefore, the system does not display combinations
with the O class in the All Classification profiles query, where you assign composite forecast profiles to the class
combinations.
To edit an XYZ analysis profile, click the All XYZ Analysis Profiles link and choose the Refresh link in the
lower right corner of the screen. The system loads the existing XYZ analysis profiles, which you can edit by
clicking the link in the XYZ Analysis Profile column, and choosing the Edit pushbutton in the window that
opens.
To delete an XYZ analysis profile, select the row of the profile, and choose the Delete XYZ Analysis
Profilepushbutton. You can delete multiple XYZ analysis profiles at the same time.
Creating, Editing and Deleting Classification Profiles
Classification profiles combine ABC and XYZ analysis profiles and let you assign composite forecast profiles to the
class combinations that belong to the combined ABC and XYZ analysis profiles.
You can create, edit and delete classification profiles in the ABC/XYZ Configuration All Classification
Profiles query of the Demand Planning Worklist, as follows:
To create a classification profile, click the All Classification Profiles link and choose New. In the Overviewview,
specify the planning area you want to use, the name of the classification profile, and the ABC and XYZ analysis
profiles you want to combine.
In the Composite Forecast Assignment view, you assign a composite forecast profile to each class combination.
You can create composite forecast profiles on the SAP Easy Access screen, under Advanced Planning and
Optimization Demand Planning Environment Maintain Forecast Profiles , on the Composite Forecast
Profiles tab page. For more information, see Creating a Composite Forecast Profile.
To edit a classification profile, click the All Classification Profiles link and choose the Refresh link in the lower
right corner of the screen. The system loads the existing classification profiles, which you can edit by clicking
the link in the Classification Profile column, and choosing the Edit pushbutton in the window that opens.
To delete a classification profile, select the row of the profile, and choose the Delete Classification
Profilepushbutton. You can delete multiple classification profiles at the same time.
Activities
You can make ABC/XYZ configuration settings in the ABC/XYZ Configuration queries of the Demand Planning
Worklist. You can access the Demand Planning Worklist in one of the following ways:
In the SAP NetWeaver Business Client (NWBC), with your user role.
On the SAP Easy Access screen, under Advanced Planning and Optimization Demand Planning
Environment Demand Planning Worklist .

ABC/XYZ Classification and Forecast
Optimization

You use the ABC/XYZ Classification and Forecast Optimization report to classify planning objects into A, B, C and
X, Y, and Z classes based on the criteria you specify in Customizing for Advanced Planning and Optimization,
under Supply Chain Planning Demand Planning (DP) Basic Settings ABC/XYZ Classification Specify
ABC/XYZ Classification Profiles . The ABC classes define the revenue or sales value of the planning object,
while the XYZ classes define the dynamics of consumption or sales. The system uses these classes to determine the
best forecast profile to use for a specific planning object in forecasting.
The ABC/XYZ Classification and Forecast Optimization report generates automatic forecast profile assignment that
can be used to execute demand planning in the background. The report reduces necessary manual adjustment in the
demand planning process.
Integration
You can display the results of the classification on an aggregated or detailed level, and edit the class values
manually, on the SAP Easy Access screen, under Advanced Planning and Optimization Demand Planning
Environment Display ABC/XYZ Classification Results . For more information, see ABC/XYZ Classification
Result Display.
You can display and edit the results of forecast optimization on the SAP Easy Access screen, under Advanced
Planning and Optimization Demand Planning Environment Assign Forecast Profiles to a Selection .
The system uses the forecast profile assignments during forecasting.
Prerequisites
You can run the ABC/XYZ Classification and Forecast Optimization report only if the following applies:
You have specified a planning area that contains the planning objects that you want to classify.
To create or edit planning areas, on the SAP Easy Access screen, choose Advanced Planning and
Optimization Demand Planning Environment Administration of Demand Planning and Supply Network
Planning .
You have assigned a classification profile to the planning area that contains the planning objects that you want to
classify.
To assign a classification profile to the planning area, on the SAP Easy Access screen, choose Advanced
Planning and Optimization Demand Planning Environment Demand Planning Worklist , and in
the ABC/XYZ Configuration queries, choose All Classification Profiles.
Recommendation
We recommend that you run ABC/XYZ classification on all of the planning objects that belong to one planning area,
since in the ABC/XYZ Configuration queries of the Demand Planning Worklist, you can specify criteria that can
make your classification and forecast optimization results distorted if you run classification only on a restricted
group of planning objects.
To use this function, you must activate the business function SCM-APO-FCS, Events and Outliers, Causals,
ABC/XYZ Classification (SCM_APO_FORECASTING_1). For more information, see SCM-APO-FCS, Events and
Outliers, Causals, ABC/XYZ Classification.
Features
You can use the ABC/XYZ Classification and Forecast Optimization report to group planning objects into
ABC/XYZ classes, and find the most optimal forecast profile for them that the system can use during forecasting.
You can run ABC/XYZ classification together with forecast optimization, or separately. If you want to run forecast
optimization separately, you must make sure that you have run ABC/XYZ classification beforehand, so that the
system has classified planning objects to work with.
Selection
You specify the selection that you want to run ABC/XYZ Classification and Forecast Optimization on. In
theSource screen area, you specify the planning area, planning version, and the selection profile that define the
group of planning objects you want to classify. You also provide the classification profile that you want to use.
In the Horizon for ABC Analysis screen area, you specify the beginning and end of the period for which you want to
run ABC classification for.
In the Horizon for XYZ Analysis and Forecast Optimization screen area, you specify the beginning and end of the
period for which you want to run XYZ classification for. You also specify the periodicity you want the system to use
when it runs forecasting and ABC/XYZ classification.
Recommendation
We recommend that the periodicity and the horizon you specify for ABC/XYZ classification are the same as the
periodicity and horizon you use for forecasting.
Note
When running, the ABC/XYZ Classification and Forecast Optimization report locks the selection on the planning
level you specified for ABC classification. If you run forecast optimization without ABC/XYZ classification, the
report locks the selection on the planning level you specified for XYZ classification. To prevent problems with other
application locks, on the SAP Easy Access screen, under Advanced Planning and Optimization Demand
Planning Environment Administration of Demand Planning and Supply Network Planning on the Locking
Logic tab page, select the Key-Figure-Specific Lock checkbox.
Classification
You run classification for a selection profile containing the planning objects, with a classification profile that
contains the details of the classification rules and the level of the classification. To run ABC/XYZ classification, in
theSelected Actions screen area, select the Classification checkbox.
Forecast Optimization
To run forecast optimization, in the Selected Actions screen area, select the Forecast Optimization checkbox. During
forecast optimization, the system finds the best forecast profile assignment for each planning object automatically,
as follows:
1. For each planning object, the system obtains the composite forecast profile that is assigned to the object's
ABC/XYZ class in the All Classification Profiles query of the Demand Planning Worklist.
2. The system executes forecasting based on the forecast profiles that the composite forecast profile contains.
Based on the error measure that the composite forecast profile contains, the system selects the univariate forecast
profile that returns the smallest error.
3. The system generates a master forecast profile, assigns the selected forecast profile to it, as well as the selection,
the forecast key figure you specified in the Forecast Key Figure field in the Selected Actionsscreen area, and the
number of future periods that you specified in the Number of Future Periods field.
If you select the Only for Objects Without Assigned Forecast Profiles checkbox, the system performs forecast
optimization only for the planning objects that it has not performed forecast optimization for before, and as a result,
have no forecast profile assigned to them.
If you want to keep your forecast optimization results for future runs of forecast optimization, in other words, if you
want to keep the forecast profile that the system assigned to the planning object, choose the Disable Forecast
Optimization pushbutton in Display ABC/XYZ Classification Results. For more information, see ABC/XYZ
Classification Result Display.
If you run ABC/XYZ classification on a set of planning objects on which you have already performed forecast
optimization, the system keeps the forecast profile assignment of the forecast optimization run.
Settings for XYZ Classification
If you select the Detrend or Deseasonalize checkbox, you can tell the system to clean the historical time series that is
the basis of XYZ classification from the trend and seasonality pattern, respectively. The system runs a trend, or
seasonality test first to decide whether it should perform detrending or deseasonalizing.
Parallel Processing
You can run the ABC/XYZ Classification and Forecast Optimization report in parallel processing mode. In theOther
Settings screen area in the Paral. Proc. Profile (Name of Parallel Processing Profile) field, specify the parallel
processing profile that you want the system to use when running the report in parallel processing mode. You define
parallel processing profiles in Customizing for Advanced Planning and Optimization, under Supply Chain
Planning Demand Planning (DP) Profiles Define Parallel Processing Profile .
Business Add-Ins for ABC/XYZ Classification
The following Business Add-Ins (BAdIs) are available for ABC/XYZ Classification, in Customizing for Advanced
Planning and Optimization, under Supply Chain Planning Demand Planning (DP) Business Add-Ins (BAdIs)
ABC/XYZ Classification :
BAdI: Change of ABC/XYZ Classes Determined by ABC/XYZ
Classification(/SAPAPO/BADI_DP_ABCXYZ_CHANGE)
You can use this BAdI to override the ABC and XYZ classes that the system determines during an ABC/XYZ
Classification and Forecast Optimization run, before the system saves the results.
BAdI: Change of Forecast Profile Assignment Before Fcst.
Optimalization(/SAPAPO/BADI_DP_ABCXYZ_FPRFCHG)
You can use this BAdI to assign a different MLR or univariate forecast profile to a characteristic value
combination (CVC) during a forecast optimization run. This means that implementing this BAdI, you can
override the settings you maintain in the Demand Planning Worklist, in the ABC/XYZ Configuration -> All
Classification Profiles queries on the SAP Easy Access screen, under Advanced Planning and Optimization
Demand Planning Environment Demand Planning Worklist .
BAdI: Own Variation Coefficient Calc. Logic During XYZ
Classification(/SAPAPO/BADI_DP_ABCXYZ_OWNVARI)
You can use this BAdI to define your own variation coefficient calculation logic that the system uses during
XYZ classification.
Activities
To access this report, on the SAP Easy Access screen, choose Advanced Planning and Optimization Demand
Planning Environment ABC/XYZ Classification and Forecast Optimization .

ABC/XYZ Classification Result Display

You use this function to display the results of the ABC/XYZ Classification and Forecast Optimization report, and
change them, if necessary.
Display ABC/XYZ Classification Results is a Web Browser application that you can call up in the SAP NetWeaver
Business Client (NWBC) or in NWBC for HTML. You can also call Display ABC/XYZ Classification Results from
the SAP Easy Access screen.
Prerequisites
You can work with Display ABC/XYZ Classification Results if the following applies:
If you want to call Display ABC/XYZ Classification Results in the SAP NetWeaver Business Client (NWBC)
you must have installed SAP NetWeaver Business Client 3.5 for Desktop on your desktop. For more information
about the NWBC, see SAP Library for SAP NetWeaver on SAP Help Portal athttp://help.sap.com/nw703, under
the following locations:
o Getting Started - Using SAP Software Getting Started SAP NetWeaver Business Client
o SAP NetWeaver by Key Capability Application Platform by Key Capability ABAP Technology UI
Technologies in ABAP SAP NetWeaver Business Client
Your user is assigned to one of the following roles:
o DP Expert (SAP_SCM_FCS_PLN_EXP_2)
o DP Administrator (SAP_SCM_FCS_PLN_ADM_2)
o DP Planner (SAP_SCM_FCS_PLN_STD_2)
For more information, see Roles for Demand Planning (DP).
To use this function, you must activate the business function SCM-APO-FCS, Events and Outliers, Causals,
ABC/XYZ Classification (SCM_APO_FORECASTING_1). For more information, see SCM-APO-FCS, Events and
Outliers, Causals, ABC/XYZ Classification.
Features
The system displays the following information:
Selection Parameters view
In this view, you find the planning area and selection that you ran ABC/XYZ classification for.
Classification view
You find the results of the ABC/XYZ Classification and Forecast Optimization report, in table and chart format.
Details view
You find the details, such as the planning version, ABC and XYZ class, and source key figure, the
characteristics based on the XYZ level (for example, region, channel, SKU), the forecast profile that the system
determined as the most suitable for the specific class.
You can change the ABC and XYZ class, by choosing the Set ABC Class, or Set XYZ Class pushbuttons.
Note
If you change an ABC planning object's class, you must take into consideration that the system changes all of the
lines in the Details screen area whose ABC planning level for the specific ABC class is the same as the ABC
planning level of the object that you change.
For each class, you can specify that you want to disable forecast optimization in the future, by choosing
theDisable Forecast Optimization pushbutton. This means that the system does not search for the best forecast
profile for the specific combination in future runs of the ABC/XYZ Classification and Forecast
Optimization report, even if you select the Forecast Optimization checkbox in the report, but uses the forecast
profile in the Forecast Profile column of the Details screen area.
You can add or hide columns in the Details screen area, by choosing Settings.
You can filter the columns by choosing Filter.
Summary view
You find a summary of the report result. For example, the system displays the number of new objects for which
no sales history exists.
Activities
You can access the ABC/XYZ classification result display in one of the following ways:
In the SAP NetWeaver Business Client (NWBC), with your user role.
On the SAP Easy Access screen, choose Advanced Planning and Optimization Demand Planning
Environment Display ABC/XYZ Classification Results .