Products
The Power of Product Categorization
With the support of AI, Supply Cloud customers can harness a common product classification model that drives insightful, accurate, and actionable data analytics.
November 14, 2024
With the support of AI, Supply Cloud customers can harness a common product classification model that drives insightful, accurate, and actionable data analytics.
In today’s fast-paced e-Commerce landscape, effective product categorization is crucial for understanding and leveraging market trends, customer preferences, and sales data.
But what exactly is product categorization, and how can it drive better business outcomes? Let’s dive into the intricacies of product categorization, its benefits, and how Supply Cloud’s OnePDX is revolutionizing the process with AI-driven solutions.
At its core, product categorization is the systematic placement and organization of products into hierarchical categories.
Imagine a tree structure with multiple levels of detail that classifies products from broad divisions down to specific classes. For example, in the “Electronics” division, you might find a “Computing Devices” group, which further breaks down into a “Laptops” class. Each level provides more specificity, making it easy for companies to group similar products together for streamlined organization and reporting.
Product categorization typically has three primary levels:
This is the broadest level, grouping products into overarching sectors or industries, such as “Electronics.”
The intermediate category, focusing on specific product types within the division, like “Computing Devices” within Electronics.
The most granular level, categorizing individual product types within a group, such as “Laptops.”
This structure allows businesses to understand their inventory at multiple layers, making it possible to spot trends, track market demand, and manage inventory with precision.
An accurate and standardized product categorization system offers immense value. It enables distributors to analyze purchasing and sales trends, helping them negotiate better terms with suppliers and develop stronger partnerships.
Clear product categories facilitate a structured view of purchasing and sales data, leading to more informed business decisions and insights into market trends.
By analyzing trends within specific categories, companies can identify opportunities for growth, track market share, and understand customer behaviors on a granular level.
One of the biggest challenges in product categorization lies in creating a common classification system across diverse members and suppliers. Many companies have custom product hierarchies tailored to their unique needs, which creates barriers to cross-member reporting and comparison.
Supply Cloud offers OnePDX, a product data delivery solution with an innovative AI-powered product classification tool. This tool uses artificial intelligence to seamlessly categorize products across a unified taxonomy as they enter the Product Information Management (PIM) system. This automated process removes the burden of manual classification, ensuring that each product aligns with Supply Cloud’s cross-industry classification model.
The implementation of an AI-driven categorization model allows Supply Cloud to offer unprecedented visibility into product purchase trends across its network.
As more products are categorized within the network, customers can access meaningful analytics to gain insights that were previously out of reach. This standardization across categories enables customers to make data-driven decisions and helps them understand market demands in real time.
With OnePDX, businesses can move beyond the limitations of fragmented product hierarchies, gaining the ability to “compare apples to apples” and fully capitalize on the power of their data.
Supply Cloud (a division of LBMX) drives the commercial relationship between suppliers and their customers. Leveraging a unique one-to-many network, Supply Cloud is the leading B2B platform that allows suppliers to view their many independent customers through a single lens. Powered by LBMX technology solutions, Supply Cloud has revolutionized the trading relationship for EDI, product data exchange, payments, and rebate management.
