HML Analysis: Unit-Value Example for Manufacturers
Classify six inventory items by unit value, document the selected thresholds and keep HML separate from ABC annual consumption value and VED criticality.
HML analysis groups inventory by unit value: high, medium or low. The thresholds are a management choice for the specific catalogue and review purpose, so the worksheet must show the valuation date and policy.
HML analysis answers a narrow question: which items have a high, medium or low value per unit? It does not measure annual spend or the consequence of a stockout.
Classify six items using one stated policy
Illustrative policy for this worksheet: High above ₹25,000 per unit, Medium from ₹5,000 to ₹25,000, and Low below ₹5,000. These are example thresholds, not a standard.
| Item | Unit value | HML class | Control response |
|---|---|---|---|
| Servo drive | ₹68,000 | High | Senior approval and tighter custody |
| Precision spindle | ₹42,000 | High | Serial identity and review |
| Industrial sensor | ₹18,000 | Medium | Controlled issue |
| Pump assembly | ₹8,500 | Medium | Normal approval |
| Bearing | ₹2,200 | Low | Routine stock control |
| Fastener box | ₹600 | Low | Simplified issue where appropriate |
Do not confuse HML with ABC or VED
ABC commonly uses annual consumption value, such as unit value multiplied by annual usage. VED uses operational criticality. A low-cost seal may be Vital, and a high-value spare may have low annual consumption. Keep the three labels and their reasons separate.
For accounting measurement context, review IAS 2 Inventories. The management threshold still belongs to your internal policy.
Maintain HML evidence in Optiwise
Optiwise inventory records keep item, UOM, valuation inputs, location and movement history together. Configurable fields and no-code workflows can record the HML class, policy version, review date and approval. Saved views can then support differentiated approval or custody processes.
Use Optiwise inventory for the source data and connect criticality separately through the VED worksheet on this site.
Review the policy when values change
Record the price basis and date. Reclassify when material prices, currency, pack size or item definition changes enough to cross a threshold. Do not silently compare a box price with a piece price.
Questions from manufacturing teams
What does HML stand for?
High, Medium and Low, based on unit value under a stated policy.
Are HML percentages fixed?
No. Set thresholds for the catalogue and control purpose, document them and review them over time.
Can an item be H, A and V at the same time?
Yes. HML, ABC and VED answer different questions, so one item can carry all three classifications.
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