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Short answer: ABC analysis sorts inventory items into three classes by how much money or usage they represent, so that the few items that matter most get the closest control. In practice class A items are counted most often and class C least. The class boundaries are not a standard: each organisation chooses and documents its own, and for medical and laboratory supplies a criticality layer called VEN is often added so that cheap but vital items are not neglected.
This page is general information for lab, clinic and supply staff who need to decide how to rank a stockroom and how often to count each group. It is not medical advice.
What ABC analysis in inventory is
ABC analysis is an inventory categorization method. Lokad, a supply-chain software vendor, describes it as an inventory categorization method and calls it “a crude prioritization mechanism” (Lokad, vendor explainer). Items are ranked by value or usage and split into class A (the top group), class B (the next group) and class C (all remaining items). The same idea is also searched as ABC inventory classification; both names refer to this one method.
The method does not tell you what to buy or how much to hold. It tells you where to spend counting and review effort. For the records, expiry and recall side of a clinical or lab stockroom, see medical supply inventory management, which this page deliberately does not repeat.
How the classes are built and used
Cutoffs are chosen by the organisation
Ohio State University’s inventory policy (Office of Business and Finance, issued 1 July 2021) describes A items as “a percentage of highest dollar or usage items”, B items as the next percentage, and C items as all remaining items. The policy gives no percentages. That is the useful point for anyone setting up a scheme: the split is a local rule you define and write down, not a number you can look up. Lokad’s explainer gives 60% (A), 30% (B) and 10% (C) only as an example threshold set, not as a standard.
Classes drive count frequency
The same Ohio State policy allows units to perform and document periodic cycle counts based on an ABC classification where a perpetual system or local application is used (the system is approved through a waiver process). Its rule is:
| Class | Definition in the policy | Count interval |
|---|---|---|
| A | Highest dollar or usage items | Every 30 days |
| B | The next percentage of items | Every 60 days |
| C | All remaining items | Every 90 days |
This is one institution’s rule, not a general requirement. The policy defines a cycle count as a periodic count used “as a verification of the effectiveness of the controls in place”, and it also states that obsolete inventory is to be identified at least annually. In the same document, medical and pharmacy inventories of the Health System use a periodic system reconciled annually, while storeroom inventories are perpetual and reconciled monthly. The classification therefore sits inside a wider control framework rather than replacing it.
ABC inventory classification versus ABC-VEN
ABC ranks by money. In a stockroom that supplies patient care or experiments, an inexpensive item can still be one the work cannot proceed without. ABC-VEN addresses this by cross-tabulating the ABC (cost) classes with VEN, which stands for Vital, Essential and Non-essential. A 2023 study of medicines and medical supplies in the Nyamagabe district of Rwanda (Journal of Pharmaceutical Policy and Practice, PMC10129016) assigned VEN using judgmental methods and existing references, then grouped the nine combinations into three categories:
| Category | Combinations | What it holds | Share of items | Share of cost |
|---|---|---|---|---|
| I | AV, BV, CV, AE, AN | All expensive or vital products | 55.80% | 87.88% |
| II | BE, BN, CE | Middle group | 40.70% | 11.82% |
| III | CN | Cheapest and non-essential | 3.50% | 0.30% |
The point of the table is the CV cell: a low-cost vital item lands in category I, which plain ABC would have placed in the least-watched class. The shares are the results of one district’s study of medicines, not a rule for your stockroom. The authors conclude that vital and expensive products should be carefully monitored to prevent a shortage, and they recommend regular ABC-VEN analysis of medical supplies.
Where it matters for lab and clinic stockrooms
- Counting effort. Where a perpetual record exists, class-based cycle counts spend counting time on the items that carry the most value or usage, in the way the Ohio State policy sets out.
- Criticality, not only cost. A VEN layer gives staff a place to record that an inexpensive consumable is vital, which cost-only ranking hides.
- Supplier and system reports. If a supplier or an ERP or inventory system produces class reports, ask how it defines A, B and C (the cutoffs, the period of usage and whether criticality is included), because the definitions differ between organisations.
- Related decisions. Software that holds these records is compared in laboratory inventory management software, and the equivalent practice in animal-care stockrooms is covered in veterinary inventory management.
Common misunderstandings
The percentages are fixed
They are not. Ohio State’s policy gives none, and Lokad’s 60/30/10 is labelled as an example. Document your own cutoffs.
Class A means the most important items
Class A means highest value or usage in the ranking you chose. Importance to patients or experiments is a separate question, which is exactly why VEN was added in the Rwanda study.
Classes stay put
Lokad argues that between a quarter and a half of items change category every quarter, that the method assumes stable demand and so misses launches and seasonality, and that frequency does not equate with economic importance. Treat that as the vendor’s criticism, but it supports re-running the classification on a schedule and recording the date of each run.
FAQ
What is ABC inventory classification?
It is the sorting of inventory items into classes A, B and C by value or usage, with A the highest group and C the remaining items, used to decide how closely each group is controlled and counted.
How often should A items be counted?
There is no universal interval. Ohio State University’s inventory policy counts A items every 30 days, B items every 60 days and C items every 90 days, as one institution’s rule for units using a perpetual system with an approved waiver.
What is VEN?
VEN stands for Vital, Essential and Non-essential. It is a criticality ranking combined with ABC cost classes in ABC-VEN analysis, so that cheap but vital items are still monitored closely.
Sources
- Ohio State University, Office of Business and Finance, Inventory policy (issued 1 July 2021), checked 3 November 2026.
- ABC-VEN analysis of medicines in Nyamagabe district, Rwanda, Journal of Pharmaceutical Policy and Practice, 2023, checked 3 November 2026.
- Lokad, ABC analysis (inventory) definition, vendor explainer, checked 3 November 2026.
