Welcome to AHRMM's healthcare supply chain Lexicon. This database contains terms used throughout the healthcare supply chain field. Simply click on the link to access the entire definition.

AHRMM thanks Kate Vitasek and Supply Chain Visions for their contribution of certain terms to the Lexicon. Terms supplied by Supply Chain Visions are used with permission. Supply Chain Vision’s Glossary of Supply Chain Management Terms appears on the Council of Supply Chain Management Professionals website. AHRMM also acknowledges Michael B. Neely with Perimeter Solutions Group for his role in developing healthcare-specific terms.

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  • ABC

    See Activity Based Costing
  • ABC Classification

    Classification of a group of items in decreasing order of annual dollar volume or other criteria. This array is then split into three classes called A, B, and C. The A group represents the largest group from a financial movement perspective with 10 to 20% by number of items, and 50 to 70% by projected dollar volume. The next grouping, B, represents about 20% of the items and about 20% of the dollar volume. The C-class contains 60 to 70% of the items, and represents about 10 to 30% of the dollar volume.
  • ABC Classification

    A method of Classifying inventory items relative to their impact on total control. ABC typically uses movement and cost data to calculate the value of stock usage over the prior period, and uses the result as an element in ranking items under an 80/20 Pareto rule for cycle counting purposes. The group is divided into class┐es called A, B, and C (and sometimes D) with The A group represents the highest value with 10 to 20% by number of items. The B, C and D (if used) groups are each lower values but typically higher populations. Items with higher usage value are (the 20%) are counted more frequently. Specific bars to be used in setting ABC levels will vary by organization as they will impact the financial control applied to inventory and the level of effort spent counting. See: Cycle Count
  • ABC Costing

    See Activity Based Costing
  • ABC Inventory Control

    An inventory control approach based on the ABC volume classification of Products, (A items are highest volume or cost, B items are less volume or cost, C items are lowest volume or cost). In this approach the A items are counted most frequently, the B items are counted less frequently than the A but more often than the C items which are counted less frequently. This approach is often used in an effective inventory cycle counting process and results in a higher level of inventory accuracy. The items which have the largest degree of movement are monitored more closely as those items tend to be have more variance between the physical inventory counts and fiscal records maintained in accounting.
  • ABC Inventory Control

    A method of inventory control which divides items into categories based on value of usage, something like a Pareto division where the items which constitute the highest dollar value are tracked more closely than those with lower value movement. In this method an item with high volumes of movement, but low cost, such as a small cheap fastener, would likely be counted less frequently than a slower mover which has a very high cost. Items are typically divided by a company defined set of values into "A", "B" and "C" groups, and sometimes even a "D" group. Then count frequencies are applied to the groups, for example "A" class items may be counted weekly, "B" monthly, "C" quarterly, etc. as a part of a cycle counting program.
  • ABC Model

    In cost management, a representation of resource costs during a time period that are consumed through activities and traced to products, services, and customers or to any other object that creates a demand for the activity to be performed.