Product Lining

Systems Economics Lexicon · Resource Loci & the Guide to Classification

Product Lining is the process of dividing a company’s revenue into functionally distinct barcodes.

Company financial reports typically break revenue down by operating segment — but those segments are internally defined and don’t necessarily line up with function. Some companies organize segments by product, others by geography or customer, so the classifier has to read through whatever breakdown is given and separate out what’s actually functionally unique. A firm’s product line counts as functionally unique when its barcode differs from every other product’s barcode in some field — and that difference doesn’t have to show up in the Enterprise Field. The book’s example: hospitals get different barcodes depending on whether their services are covered by private or government insurance, even though the underlying medical service is the same — the differentiator sits in the Intermediary Field, not the Enterprise Field.

Once a company’s revenue has been divided this way, assigning a percentage to each product line becomes possible, and that in turn is what makes it possible to identify a Summary Barcode — the single product line, or combination of product lines, that best represents the company’s primary function. Product lining is the step that has to happen first; without it, there’s no basis for deciding which barcode should stand for the company as a whole.

See also: Summary Barcode · Product, Product Line, and Product Tier

Part of Resource Loci & the Guide to Classification, course 5 of 7 in the Locus Theory series. For the full term-by-term specification, see the Lexicon.