ADDITIONAL INFO

MODULE NAME: PUBLIC PROCUREMENT OPERATIONS

UNIT NAME: PLANNING FOR PROCUREMENT
ABC CATEGORIES OF REQUIREMENTS PARETO PRINCIPLE
The Pareto principle (also known as the 80-20 rule) states that, for inventory/
procurement, roughly 80% of the value of inventory/ procurement comes from 20% of
the Items stocked/ purchased. Based on this, items are normally classified into A, B
and C categories as follows: "A Category Items" inventory/ procurement will typically contain items that are
20% of total items but account for 80% of total value, and
"B Category Items" inventory/ procurement will typically contain items that are
30% of total items but account for next 15% (81% - 95%) of total value, and
"C Category Items" inventory/ procurement will typically contain items that are
50% of total items but account for next 5% (96% - 100%) of total value.
Normally buffer levels, permitted inventory levels and types/ modes of procurement
are decided based on such categorisation. A one-time exercise may be done for
common items by procurement department and for local items by the units concerned
to categorise items in such categories.

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