An important aspect of managing inventory is to have a way to classify it based on its importance. All items in the supply chain are not of equal importance. Some are very important, such as specialized surgical equipment. Others are less important, such as latex gloves in a hospital. The first step in managing inventory is to classify inventory based on its degree of importance to manage it properly. The tool for this is ABC classification. Classifying inventory based on degree of importance allows us to give priority to important inventory items and manage those with care. It also prevents us from wasting precious resources on managing items that are of less importance.