12 min read
FSN Analysis in Inventory Management
TL;DR: FSN analysis helps manufacturers classify inventory into fast, slow, and non-moving items to reduce costs, improve cash flow, and avoid stockouts.
FSN Analysis in inventory management is important for maintaining business performance and profit, especially in manufacturing.
What is FSN Analysis?
FSN analysis classifies inventory based on movement rate so businesses can control stock better.
How Does FSN Analysis Work?
Items are grouped by sales or usage over a defined period, enabling better stocking and purchasing decisions.
Importance of FSN Analysis
It helps reduce holding costs, improve cash flow, and ensure availability of high-demand items.
How to Conduct FSN Analysis
List inventory items
Collect usage data
Calculate annual usage
Classify into F, S, and N categories
Advantages and Limitations
FSN analysis improves planning but depends on accurate data and stable demand.
FAQs
What is FSN analysis?
A method to classify inventory by movement rate.
Why is FSN analysis useful?
It prevents excess stock and stockouts.
What are fast-moving items?
Items with high sales frequency.
What are non-moving items?
Items that remain unsold for long periods.
Is FSN analysis suitable for SMEs?
Yes, it is especially useful for manufacturing SMEs.
