The Product Performance dashboard is Treez’s take at bringing the ABC/XYZ analysis to the cannabis world. The ABC/XYZ analysis is a method of classifying products according to their revenue value and volatility of demand, meaning individual products are grouped by how much money they bring into your shop (ABC) and how steady their demand is (XYZ).
- How this Dashboard Can be Used
- ABC Analysis
- XYZ Analysis
- Grid Analysis
- Metric Cards Explained
How this Dashboard Can be Used
This dashboard gives you insight into the value each of your products provides to your operation so you can strategize how to sell, move, or forecast your inventory more intelligently.
NOTE: This dashboard includes clickable Drill-Downs (DD) for a more detailed view of your metric card. If a card has a DD, instructions will be shared on how to use it. To get back to the original metric card, click slightly behind the arrow next to the DD metric card name.
Products found in the ABC grouping are based on historical sales volume. This means that we compare products with high sales volumes ($ amount) to those with lower sales volume. We usually consider products that have a high sales volume as valuable, so in our ABC model, we set thresholds for determining product tiers.
- A | High-value products that contribute to 70% of your historical sales for a particular category.
- B | Medium-value products that contribute to 20% of your historical sales for a particular category.
- C | Low-value products that contribute to the bottom 10% of your historical sales for a particular category.
XYZ is based on the variability of your historical demand or the variability of your forecast. In Treez, we look at the variability of your historical demand, meaning we look at how stable and consistent product sales are. For the XYZ grouping, we rank each product on how consistent the demand is.
- X | Product with a constant stable demand
- Y | Product with a strong variability in demand
- Z | Product with an irregular/difficult to predict demand
To calculate the XYZ ranking, you’ll need to calculate the Mean daily average units for the product type you are analyzing. This is done so we only analyze the product within its category. Once you have the mean, determine if the product falls within 20%, 40% or 60% Standard Deviation of the Mean. X is within 20%, Y is within 40%, and Z is within 60% of the mean.
Once a product has been assigned an ABC / XYZ value, we then analyze them based on how they were segmented. Since items can be categorized into 9 different groups, it’s important you understand those groups so you can create strategies that best fit your product.
(AX, AY, AZ)
- These are high-value products (A), with less variability (X) to higher variability (Z)
(BX, BY, BZ)
- These are medium-value products (B), with less variability (X) to higher variability (Z)
(CX, CY, CZ)
- These are low-value products (C), with less variability (X) to higher variability (Z)
Let’s briefly examine how grid analysis would apply to an example product. In this example, we will be using a product called 'Sheldon’s Pineapple Express Pre-Rolls'. Where the pre-rolls fall on the grid will impact how we action on the inventory.
If the pre-rolls were segmented to AX (High Value, Low Variability), we would know that the item is profitable and easy to forecast. Being in this zone indicates that the current methodology is working. Very little action is required.
If the pre-rolls were segmented to AZ (High Value, Medium Variability) we would know that the item is profitable, but harder to forecast given the variability. This is a strong indicator that the item will require input from sales or marketing. The item is obviously important for revenue generation, so figuring out a strategy to make its presence consistent would be the next step.
If the pre-rolls were segmented to CY (Low Value, Medium Variability) or CZ (Low Value, High Variability) we would know the item contributes very little value or is hard to predict. Strategies can vary from trying to increase demand or sales by pushing promotions around that product or simply leaving it alone until it sells itself out.
Metric Cards Explained
Shows the ABC/XYZ segmentation. Additionally, it shows the Total Revenue & Number of Distinct Products in that segmentation for the last 90 days.
DD: ABC_XYZ Measurement_Products
Shows all products that fall into the segmentation you drilled into.