In procurement, ABC analysis is an inventory categorization method which divides items into three categories based on their importance. “A” items are the most important and costly items, while “C” items are the least important and cheap. This categorization system allows businesses to know which products require more investment and more attention when it comes to procurement decisions. By understanding each item’s importance, businesses can optimize their resources for maximum profit and efficiency. ABC analysis makes sure that no detail goes overlooked in the procurement process, making it a must-have tool for any organization.