Product Categories

Product categories are a general tool for segmenting products and assets. They are essentially a codebook that allows for segmentation according to the needs of the company.

Examples of categories for a bank might be:

• For a bank: investment services, credit services, cards.
• For a manufacturing company: electronic parts, components, fasteners.
• For a car dealership: new cars, used cars, service, rental.

What is the relationship between products and categories?

Every product belongs to a category. A category can therefore be seen as a more general concept than a product. Specific assets always also have a category, but so it is always derived from the product, so it corresponds to the category to which the product belongs.

Hierarchy

Categories can be structured into a hierarchy for a more detailed breakdown. If you use a hierarchy, we recommend using only the lowest level of the hierarchy for products for clarity. You should actually have a reasonable reason to copy the category hierarchy into products as well.

Categories and products may form multiple trees, or they may not form a hierarchy at all. Therefore, it makes sense to create your own category and product trees or groups for the products you manufacture and purchase. Even within purchased, it is useful for clarity to separate those purchased for production and those purchased by the organization to support its own operations, i.e. typically for offices, building management, etc.

How and why use categories?

The main purpose of categories is to allow a global breakdown of products as is customary in the organization and how assets are broken down for reporting. This is also what the category structure should follow.
In principle it is not necessary to use categories, they are only for clarity. It is possible to have only one single category – e.g. an all-encompassing all; at least one is needed because without it you cannot record assets or define products.