Categorize Products Odoo 17 for streamlined operations. A well-defined product categorization system simplifies day-to-day tasks, aiding in restocking, order fulfillment, and overall inventory control. Grouping similar items enables businesses to easily locate and manage stock. Product categories play a crucial role in crafting targeted marketing strategies, allowing businesses to tailor their efforts based on specific Odoo 17 product groups and cater to the unique needs of different customer segments.

Product Categorization in Odoo 17 ERP Software provides insights into the performance of different product groups. This data is valuable for inventory analysis and future planning. Businesses can identify trends, assess the popularity of certain categories, and make informed decisions about stocking levels, product expansion, or discontinuation. Workflow coordination is made possible by the Product Category Management’s interface with other Odoo modules, including Sales and Purchase.

Let us see how to create and manage Product Categories in Odoo 17. For that, we can access the ‘Purchase’ Application of the Odoo ERP system.

Purchase Application => Configuration Menu => Products Section => Product Categories

On going to the ‘Product Categories’ window, we can find all the product categories configured in the Odoo ERP System. Now, if you want to create a new product category, select the ‘New’ option.

In the Product Category form, we can specify the category name, parent category, Avatax category, and TaxCloud category.

Parent Category: A parent category is a higher-level category in Odoo 17’s product category management that may have child categories (subcategories) nested beneath it. More order is achieved in the classification and organization of products thanks to this hierarchical framework. Let’s say you have a parent category called Edibles, and under it are subcategories called Fruits, Pulses, and Nuts. Better product organization and system navigation are made possible by this structure.

Avatax Category: AvaTax categories enable the system to apply the correct tax rates based on the nature of the products or services being sold. Different products may be subject to different tax rates or exemptions, and categorizing them accurately ensures that the correct taxes are calculated.

TaxCloud Category: Odoo facilitates integration with external tax services to expedite tax-related procedures, and TaxCloud is a service that offers automated sales tax computations. In the process of defining a product category, you can come across a field labeled ‘TaxCloud Category’. In this area, you can link the product category to an equivalent category or configuration in TaxCloud.

In the ‘Logistics’ section, we can specify the Routes of the product category which are the operations to be undergone for the movement of that specific product category.

The ‘Force Removal Strategy’ field in the product category form allows users to select different methods such as FIFO, FEFO, LIFO, Closest location, Least packages, and so on to remove products from its stock.

The First In First Out (FIFO) principle states that the first things received will be shipped first. This approach is particularly beneficial for businesses that deal in perishable items or operate in sectors like the fashion industry where being up to date is crucial and have short demand cycles. Last In First Out (LIFO) functions under the assumption that those who arrive most recently depart first. This approach is especially applicable to non-perishable goods.

First Expiry First Out (FEFO) is an additional removal strategy that is available if the Inventory Module settings’ Expiration Dates option is activated. When it comes to products with a short shelf life, FEFO makes sure that they are shipped according to their expiration date.

The physical placement of the goods within the warehouse is given greater weight in this unique method called ‘Closest Location’. This strategy offers a different approach to strategic inventory management and is frequently used for products that have consistent quality throughout time.

The ‘Reserve Packagings’ field provides a versatile solution in the domain of product category administration. It presents two separate options: ‘Reserve Only Full Packagings’ and ‘Reserve Partial Packagings.’ The system functions precisely when ‘Reserve Only Full Packagings’ is selected, enabling reservations for whole packaging units alone. Consider the following scenario: a consumer orders two packets, each containing one hundred units. The system will intelligently reserve only a full packaging unit of 100 if the available stock is 150 units. This ensures accurate fulfillment while accurately portraying the current stock position.

The ‘Reserve Partial Packagings’ option, on the other hand, gives inventory reservation a dynamic component. When a customer places an order for, say, two pallets of 100 units each, and there are 150 units in stock at the moment, this setting guarantees that all 150 units will be reserved. Because of this flexibility, order fulfillment can be handled more conveniently, making the most of the stock that is on hand even in situations where full packaging units cannot be allotted.

The next is the ‘Inventory Valuation’ section where we need to specify the costing method and inventory valuation method of the Product Category. Odoo offers multiple techniques of costing for the inventory value of product categories. Several typical techniques include

Standard Price: Regardless of real cost fluctuations, this system assigns a constant cost to each unit. This steadfast number doesn’t change even when actual costs in the market inevitably rise and fall.

Average Cost: For valuation purposes, the system computes the average cost of each unit in stock.

The First In First Out (FIFO) technique operates under the premise that the first inventory goods added will also be the first ones to be sold.

The Inventory Valuation can be either manual or automated and can be selected from the drop-down in the inventory valuation field.

Under the ‘Account Properties’ section, an ‘Income Account’ in Odoo’s product category configuration is generally connected to revenue or money received from the sale of a product. The money received from the sale of the goods is tracked through this account. However, an ‘Expense Account’ is associated with expenditures or expenses that are exclusive to the product. It facilitates keeping track of the funds used to create or purchase the product. You can organize and manage your financial activities on the cost and sale of items by creating these accounts in the product category settings.

In conclusion, categorizing products efficiently is a fundamental aspect of managing an inventory effectively within Odoo 17. By leveraging the robust features of the Odoo 17 platform, businesses can enhance their organization, making products easily searchable, and improving overall workflow. Through this blog, we’ve explored key steps to master product categorization.