What is pareto analysis in SAP SRM-BW - SRM Analytics?

SAP Term: pareto analysis

• Component: SRM-BW

• Component Name: SRM Analytics

• Description: A method of classifying items, events, or activities according to their relative importance. It is frequently used in inventory management to classify stock items into groups based on the total annual expenditure for, or total stockholding cost of, each item. Organizations can concentrate more detailed attention on the high value/important item. The alternative term ABC analysis stems from the fact that the first 20% of important items are known as Category A items, the next, typically 40% are Category B items and the relatively unimportant, though larger in number 40% are Category C items.

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• Key Concepts: 
  Pareto Analysis is a statistical technique used to identify the most important factors in a given situation. It is based on the Pareto Principle, which states that 80% of the effects come from 20% of the causes. In SAP SRM-BW SRM Analytics, Pareto Analysis is used to identify the most important factors in a given situation, such as customer satisfaction or product performance. 
  
  How to use it: 
  In SAP SRM-BW SRM Analytics, Pareto Analysis can be used to identify the most important factors in a given situation. To do this, users must first define the criteria they want to analyze and then select the appropriate data sources. Once the data is collected, users can then use Pareto Analysis to identify the most important factors in the given situation. 
  
  Tips & Tricks: 
  When using Pareto Analysis in SAP SRM-BW SRM Analytics, it is important to remember that it is only as accurate as the data that is used. Therefore, it is important to ensure that all relevant data is collected and analyzed before making any decisions based on the results of Pareto Analysis. Additionally, it is important to remember that Pareto Analysis only identifies the most important factors in a given situation; it does not provide any insight into how those factors should be addressed or managed. 
  
  Related Information: 
  For more information about Pareto Analysis and how it can be used in SAP SRM-BW SRM Analytics, please refer to the official SAP documentation. Additionally, there are many online resources available that provide more detailed information about how to use Pareto Analysis in SAP SRM-BW SRM Analytics.