Product Classification in Supply Chain

Abstract: Oriflame is a famous international direct sale cosmetics company with complicated supply chain operation but it lacks of a product classification system. It is vital to design a product classification method in order to support Oriflame global supply planning and improve the supply chain performance. This article is aim to investigate and design the multi-criteria of product classification, propose the classification model, suggest application areas of product classification results and introduces the product classification system into Oriflame ERP system. The research scope is defined within Oriflame supply chain from the order placed to suppliers by Global Supply department to the products received in Global Hubs.Investigation approaches in this article including information collection, multi-criteria integration, and quantified analysis. In addition, sample calculation and test to stakeholder departments have been done after the proposal of product classification system.The product classification applies a cross tabulate matrix to classify products into four classes (ABCD classification), it is believed that the results keep consistent at high level with both the calculation time horizons‟ increasing and the monthly forecast report update.Hence, Product Classification System is supposed to be applied in supply planning prioritization, inventory management and workforce balancing, etc.