What is FSN Analysis? A Guide to Fast, Slow & Non-Moving Inventory

TABLE OF CONTENT:

• What is FSN Analysis?
• Why FSN Analysis Matters?
• How to Conduct FSN Analysis (Step-by-Step)
• FSN vs. ABC vs. VED: What’s the Difference?
• Benefits of FSN Analysis
• Common Challenges in FSN Analysis
• Best Practices for FSN Inventory Management
• FSN Analysis Tools and Software
• Real-World Example of FSN Categorization
• Final Thoughts

In managing stock, items don't sell at the same rate. Some sell quickly, others slowly, and some hardly sell. That's where FSN Analysis helps.

FSN means Fast-moving, Slow-moving, and Non-moving goods. It's a helpful way for companies to sort items based on how quickly they are used. If you handle storage, sell directly to customers online, or run a big supply center, FSN analysis lets you use information to better manage your stock, lower storage expenses, and avoid having outdated products.

What is FSN Analysis?

FSN means Fast-moving, Slow-moving, and Non-moving goods is a method of categorizing inventory based on how frequently it is used or sold.

• Fast-moving (F): Items that are in high demand and are frequently consumed or sold. They need constant replenishment.
  
• Slow-moving (S): Items that move at a moderate pace, not as quickly as F-class, but still contribute to revenue.
  
• Non-moving (N): Items that rarely move or have not been used over a specific time period (e.g., 6-12 months).
  

Unlike ABC analysis (which is based on value), FSN focuses on usage rate over time. This makes it ideal for identifying dead stock and planning inventory rotation.

Why FSN Analysis Matters?

If you've ever had too much of a product that doesn't sell quickly or run out of a popular item, you understand the problems that come from bad inventory planning. FSN analysis helps you understand how your stock moves, which assists with:

• Inventory Optimization: Avoid overstocking or understocking.
  
• Cost Reduction: Reduce holding costs by identifying and liquidating non-moving inventory.
  
• Better Procurement Decisions: Prioritize purchases based on demand frequency.
  
• Improved Warehouse Space Utilization: Allocate space to high-turnover items.
  
• Reduced Obsolescence Risk: Identify and act on stagnant inventory before it becomes dead stock.
  

How to Conduct FSN Analysis (Step-by-Step)

Here’s how you can perform FSN analysis manually or using inventory management software:

1. Collect Inventory Usage Data

Track how many units of each SKU are consumed or sold over a fixed time frame (e.g., last 3, 6, or 12 months).

2. Sort Items Based on Usage Frequency

Arrange inventory items in descending order based on consumption rate or movement frequency.

3. Categorize Items into F, S, N

Use consumption thresholds to classify items:

• F (Fast-moving): Top 60-70% of movement
  
• S (Slow-moving): 20-30% of movement
  
• N (Non-moving): Bottom 5-10% (or no movement at all)
  

The thresholds may vary depending on your business model.

4. Review and Take Action

• Increase stock levels for fast movers.
  
• Review ordering strategy for slow movers.
  
• Consider discounting, bundling, or liquidating non-movers.
  

FSN vs. ABC vs. VED: What’s the Difference?

You can use these ways together to make a better plan. For instance, using FSN and ABC together lets you deal with items that sell quickly and are worth a lot of money first.

Benefits of FSN Analysis

1. Lower Inventory Holding Costs
   
   • Companies can use less storage and have more money available by finding products that don't sell quickly or at all.
     
     
2. Improved Stock Availability
   
   • Keeps fast-moving products in stock consistently to meet customer demand.
     
     
3. Efficient Procurement Planning
   
   • Purchase decisions are based on real demand, not guesswork.
     
     
4. Data-Driven Inventory Decisions
   
   • Removes the guesswork and introduces a structured way to manage stock.
     
     
5. Reduced Waste
   
   • Prevents product obsolescence, especially for perishable or trend-based items.
     
     

Common Challenges in FSN Analysis

• Inaccurate or Incomplete Data: Poor tracking leads to wrong classifications.
  
• Static Classification: Not updating categories regularly can cause stock issues.
  
• One-Size-Fits-All Thresholds: Each business may need custom thresholds for accurate segmentation.
  
• Lack of Integration with ERP/WMS: Without automated tools, FSN analysis can be time-consuming.
  

Best Practices for FSN Inventory Management

• Use a Rolling Time Frame: Update data every 30–90 days depending on SKU velocity.
  
• Set Dynamic Thresholds: Customize thresholds based on product category or seasonality.
  
• Combine with Other Methods: FSN + ABC or FSN + XYZ for even better control.
  
• Integrate FSN into Procurement and Forecasting: Share insights with purchasing teams.
  
• Leverage Warehouse Management Software: Automate FSN tagging and reporting.
  

FSN Analysis Tools and Software

Many cloud-based inventory platforms have FSN capabilities or custom reporting functions. Some popular tools include:

• INCIFLO
  
• Zoho Inventory
  
• NetSuite ERP
  
• Unicommerce
  
• SAP Business One
  
• QuickBooks Commerce
  
• TallyPrime (for small businesses)
  

If you use warehouse partners like Godamwale, they often integrate such tools into their fulfillment systems for real-time FSN tracking.

Real-World Example of FSN Categorization

Let’s say you run an e-commerce store that sells home decor:

• HD101 is a fast-moving item: reorder regularly and store near dispatch zone.
  
• HD205 sells moderately: review reorder frequency.
  
• HD404 barely sells: consider clearance or delisting.
  

Final Thoughts

FSN analysis is a straightforward but effective way to make your stock better. It helps companies see how items are being used, lower extra expenses, and make their storage spaces work more smoothly. In today's quickly changing business world, knowing what you have in stock is a must, not just a choice.

By using FSN analysis along with systems such as WMS or ERP, and using the findings for buying supplies, you can make sure your supply chain works well and prevent problems caused by having too much or unsellable stock.

Need help with smart inventory planning and FSN (Fast, Slow, Non-moving) analysis?
At Godamwale, we specialize in transforming chaotic inventory systems into streamlined, data-driven operations.We understand that efficient inventory planning is the backbone of successful order fulfillment. That’s why we use advanced tools and analytics to help you categorize your stock accurately, minimize dead inventory, and ensure faster turnaround times.

Redefine you Supply Chain