Inventory Management Applying ABC-FSN Analysis to Increase Storage Efficiency: A Case Study of Cosmetics Manufacturing Company

Abstract

This study aimed to examine the inventory management of a case study company operating as a contract cosmetics manufacturer by applying the ABC–FSN analysis to classify inventory items based on their value and frequency of withdrawals. The findings were then applied to improve inventory management with the objective of reducing inventory costs. The population for this study consisted of all 140 inventory items used in the production process. These items included all major components and packages collected during the study period. The sample comprised all items that were analyzed based on their value and frequency of use. The data were collected from the company’s information system, including records of goods receipts, withdrawals, and inventory balances, covering the period from October 2022 to December 2023.  This study employed descriptive statistics and percentage analysis on the selected sample of items. The results revealed that total inventory value increased by 10.85%. However, when focusing on the AS, AN, BS, and BN groups-items with high or medium value but medium-to-low turnover, the total value decreased by 448,280.23 THB, equivalent to 24.68% of the target groups. This aligns with the study’s objective of reducing inventory costs. Moreover, some items were found to shift between groups depending on their actual usage during the study period, reflecting the need for regular reclassification. This study therefore recommends conducting ABC–FSN analysis at least once a year to update classifications in line with changing demand and purchasing conditions. This practice can help maintain service levels, reduce risks associated with excess working capital and non-value-added storage, and ultimately improve the efficiency of inventory management in cosmetics manufacturing firms facing volatile order structures.