Is the Pareto Principle Costing you Money?
Italian economist Vilfredo Pareto observed in 1906 that 80% of the land in Italy was owned by 20% of the population. Business-management thinker, Joseph M. Juran, developed the 80/20 principle and named it after Pareto by observing that 20% of the pea pods in his garden contained 80% of the peas.
The Point: Only 20% of your SKUs make up 80% of your volume
Balance is not always good!
Leveraging this natural imbalance is an opportunity to drive tremendous benefits to you and your company. Single-technology distribution systems assume that all products should be handled the same way.
Mr. Pareto would suggest that we should apply different technologies on the 20% of the SKUs that generate 80% of your business than we do on the 80% of the SKUs that only generate 20% of your business. In other words, we need to apply multiple technologies to optimize the efficiency in different “bandwidths” of the Pareto Curve.
abco automation will do the analysis for you to categorize all the SKU’s in your warehouse and provide the most efficient solution to meet your needs. Download the abco automation White Paper and learn more about the Pareto Principle and Distribution and more about the New Philosophy on Distribution.
