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Knowledge base › Forecasting & Replenishment › Understand ABC classification Forecasting & Replenishment
LIVE UPDATED · 12 JUN 2026 · 1 MIN READ

Understand ABC classification

SKUs are graded A, B or C by the revenue they bring at a location, so your safety stock follows your most valuable products.

ABC classification puts your attention where the money is. Each SKU is graded by how much revenue it contributes at a location over the lookback window, so your forecasting effort and safety stock follow your most valuable products.

ABC class badges in the suggestions table

What does each class mean?

  • A, top 80% of revenue. The handful of products that drive most of your sales. Stockouts here hurt the most, so they carry the largest safety buffer.
  • B, the next 15%. Worth managing carefully, but a short gap isn't a crisis. They get a moderate buffer.
  • C, the long tail. Everything else, including SKUs with little or no recent revenue. A small buffer is fine.

How is the class worked out?

  • Revenue is summed per SKU at each location, then SKUs are ranked highest to lowest.
  • Each SKU's class depends on the cumulative revenue sitting above it: top sellers fill the A band, the next slice is B, the rest is C.
  • A SKU with no sales in the window defaults to C.

Tip. Class drives how many safety days (or what service level) a SKU gets. Set generous buffers for A items under Settings → Forecasting and keep C items lean to free up cash.

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