Product Hierarchy – Information

What is the significance of product
hierarchy?

Alphanumeric character string for grouping materials by
combining various characteristics. The product hierarchy is used for evaluation
and pricing purposes.

A product hierarchy is an alphanumeric character string
which consists of 18 characters at the most. Product hierarchy thus define the
product and its composition.

To take an example, a product hierarchy could be
00010002000300040005. The first four characters 0001 could indicate that the
product is a car. The next four characters could indicate 0002 the plant in
which the car has been manufactured. The third set of characters could indicate
the color of the car. The next set may determine its engine capacity and so on.
Thus, the product hierarchy helps in defining the product
composition.

Product hierarchy is defined in tcode v/76 according to
levels.

Then it is added as a user defined characteristic in
tcode KES1.

It is used for sales reporting functionality based on the
product hierarchy. It is used for profitability analysis reporting.


 

Different material codes can have same product
hierarchy (assigned to material master in basic data view).

When a sales cycle happen then after billing document a
PA (profitability analysis) document is created in which product hierarchy is
populated and used in CO-PA reporting.

 

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