V-E-D Analysis

This analysis or classification is mainly used for maintenance (spare parts inventory management) and is based on the significance or criticality of the item or spare part. The abbreviation for V, E and D are:

V-Stands for 'Vital' Items

These items are highly significant, no matter whether they are costly or cheap. Non-availability of such items would halt the production and running of the machine. For instance, the piston and cylinder are vital items for a bike. Of course, these are very costly items. However, a valve for the tyre of the bike is also vital item though it is very cheap.

E-Stands for 'Essential' Items

Non-availability of such items renders temporary dislocation or loss of production. In case of stock-out of such items expensive procurement may have to be made, if no stand-by facilities are available. For example, the brake for bike is essential item.

D-Stands for 'Desirable' Items

These items are necessary but do not cause any immediate loss in production. The stock-out of desirable items may entail very nominal expenditure in procurement and may cause minor disruption for a short duration, e.g. the seat covers, rare view mirror for a bike may be categorized under desirable items.

Note that A-B-C analysis categorises items to their consumption value (cost oriented), while V-E-D analysis determines the effects of items on production and other services (i.e. functional oriented).