Define Item Categories Flexfield (Required)

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Navigation: Setup --> Flexfields --> Key --> Segments 

You must design and configure your Item Categories Flexfield before you can start defining items since all items must be assigned to categories. You must indicate how many separate segments your flexfield has, how many characters each segment has, and whether you want to validate the values that you assign to the segments. 

Once you define the structure of your flexfield and any applicable value sets, you must freeze and compile your flexfield definition. Compiling the flexfield definition enables the Item Categories Flexfield pop-up window. You can define multiple structures for your Item Categories Flexfield, each structure corresponding to a different category grouping scheme. You can then associate these structures with the categories and category sets you define.