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FIGURE 9-41

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FIGURE 9-42

This concludes the determination of the customer hierarchy Its usefulness remains in that the hierarchy may be used in conjunction with the condition technique to offer discounts, surcharges, or special pricing

Product hierarchies are the domain of materials management However, it is beneficial for the Sales and Distribution module to know they exist, what they are, and where they may be maintained A product hierarchy, like a customer hierarchy, has an automatic family tree linking it back to a certain grouping of products

Master | Settings for Key Fields | Data Relevant to Sales and Distribution | Define Product Hierarchies [OVSV] A product hierarchy is assigned to the material master record This hierarchy is broken down into specific levels, each level containing its own characteristics

FIGURE 9-43

A product hierarchy is recorded by the sequence of digits within a hierarchy number This hierarchy number may have a maximum of 18 digits with a maximum of 9 levels For example, a material may be classified as a laptop computer with a tablet screen, with the product hierarchy represented, with three levels, as follows:

Thus, by assigning the hierarchy number 000010000200000100 to the material, one is able to determine a classification of the material This hierarchy may be used in pricing, with each level being used as a field in the condition technique Thus, it is possible to say all materials with a product hierarchy level 1 equal to 00001 may have a 10 percent discount

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FIGURE 9-44

Each of these levels may also be used as fields for reporting purposes in the logistics information systems It is possible for one to report on the number of computers sold by selecting all materials with level 1 equal to 00001 The SAP standard system has a product hierarchy structure consisting of three levels These three levels are broken down into two levels of five digits each and one level of eight digits Should this structure of hierarchy meet the requirements of your business, you can proceed straight through to the maintenance of the hierarchy in transaction code [V/76] If, however, you need to create a new hierarchy structure, you can use the following guidelines One needs to maintain the product hierarchy structure PRODHS (The maintenance of structures is not in the scope of this book; however, there is ample clear documentation in the system on how to perform this step) This structure defines each level and the length of digits permitted for each level, as shown in Figure 9-45

FIGURE 9-45

You may proceed to create a template that represents the product hierarchy This template should have placeholders as defined by an underscore (_) and separators as defined by a forward slash (/) or a colon (:) Thus a template of 5 and 5 and 8 digits may look as follows: _____/_____/________ You can then create the product hierarchy as used by the system, for example in Figure 9-46 Now that the hierarchy is created in the system as well as the template with the entries as allowed in the hierarchy, you merely need to ensure the hierarchy levels are in the field catalog as used in pricing, as seen in Figure 9-47

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FIGURE 9-46

The hierarchy levels must also be available in the field catalog as used in the Logistics information system (LIS) Lastly, you must ensure the material master record has the product hierarchy assigned to it in the Basic Data 1 tab under General Data, as in Figure 9-48 This concludes our section on product hierarchy Note that in some companies the product hierarchy is a critical field, and used in a number of BW and LIS reporting structures, as well as in pricing Due to its sensitivity, it is advisable to fully investigate changes to its structure before making modifications It is not as easily changed as adding a new value to a drop-down selection list