WareMatch Glossary
80/20 inventory rule
An inventory principle stating that 80% of sales often come from 20% of products.
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Updated 2025-10-01
Definition
The 80/20 inventory rule, based on the Pareto principle, highlights that a small percentage of SKUs typically generate the majority of revenue. It helps businesses prioritize focus on high-impact products.
Overview
Overview of the 80/20 Inventory Rule
In logistics and inventory management, the 80/20 rule ensures resources are allocated effectively.
- Concept: 20% of items account for 80% of sales.
- Application: Focus storage, replenishment, and forecasting efforts on top-performing SKUs.
- Example: An eCommerce company might find that its best-selling electronics drive most of its revenue.
Benefits
- Optimized inventory investment
- Better customer service for top products
- Reduced stockouts on key items
Tags
#Pareto Principle#Inventory#SKU#Optimization#Warehouse
Related Terms
ABC Analysis
Inventory Management
SKU optimization
