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Product Hierarchy in Sales Processing - Four Typical Use Cases

karen_feng
Product and Topic Expert
Product and Topic Expert
a month ago
641

Product hierarchy is a standard SAP master-data element that lets companies group materials into a multi-level tree. It allows the system to maintain, consume and analyze data at a higher level, rather than examining hundreds of products individually. 

In this blog,  four typical Product Hierarchy use cases in sales processing  will be shared.

  • Product Hierarchy for Sales Analytics (CE1908)
  • Product Hierarchy for Pricing (CE1908)
  • Product Hierarchy for Material Listing & Exclusion ( CE2208)
  • Product Hierarchy for Sales Contract Price Agreement ( CE2508 NEW )

Use case 1 - Product Hierarchy for Sales Analytics. 

In some sales analytic apps, when you select product for multi-dimensional analysis, you could easily enable and select a product hierarchy.  All valid product hierarchies could be selected for analytic display.

PH2 -analytics.png

So that your data will be displayed in a structured format and easily aggregate or drill down KPIs by collapse or expand the product hierarchy or product hierarchy nodes.

PH1 -analytics.png

Please note,  product hierarchy can only be supported in the following sales Web Dynpro apps. 

  •  Incoming Sales Orders - Flexible Analysis
  •  Sales Volume – Flexible Analysis
  • Customer Return - Flexible Analysis
  • Sales Quotation - Flexible Analysis

Use Case 2 - Product Hierarchy for Pricing 

Prerequistes：To make sure unique product hierarchy could be determined in sales processing, the product hierarchy must be assigned to a sales distribution chain (sales Organization + Distribution Chain). The screenshot shows some examples.

karen_feng_0-1760684027540.png

Product hierarchy determination in sales documents

When a sales order is created, the product hierarchy of the product and the related condition type will be automatically determined.  So far the determined product hierarchy and product parent node are only visible in Web GUI app under Sales B section.   The predefined product hierarchy condition type is DPH1. And it could be checked in both Fiori app and Web GUI app.

karen_feng_2-1760684523287.png

The following screenshot shows the product Hierarchy condition type DPH1 in Manage Sales Order - Version 2. 

karen_feng_1-1760684441470.png

Once the product hierarchy and hierarch nodes are determined in sales documents items, they will be copied to the succeeding documents to ensure consistent prices along the business process.

Pricing-flow.png

 

For example, if product hierarchy has been determined in sales quotation. When a sales order is created with reference to the sales quotation, the same product hierarchy will be copied. Therefore, if the product hierarchy master data is changed between sales quotation and sales order creation, the product hierarchy in sales order will not be redetermined.

Customizing Option

By default, the product hierarchy is determined based on sales order pricing date. This could be changed to Document Creation Date in SSCUI 107215. The corresponding screenshots are attached below:

SSCUI107215.png

SSCUI107215-1.png

 

 Use Case 3 - Product Hierarchy for Material Listing & Exclusion

Material listing exclusion is a feature to restrict sales of particular materials (products) in certain sales document(s) (Help portal for material listing & Exclusion) If a material has been excluded,  an error message will pop up showing this product cannot be sold in this sales order. 

ListingEx-error.png

 

 

Since 2022, the product hierarchy has been enabled for material listing &Exclusion. So you could easily allow or exclude the sales of a group of products under specified product hierarchy node. 

listingEx-config.png

 

Use Case 4 - Product Hierarchy for  Sales Contract Price Agreement 

In CE2502，a new item category VC03 has been released to support product hierarchy in sales value contract.  So you could set special price agreement for a group of products by specifying a product hierarchy and product hierarchy node in sales contract item. 

For example, a value contract is created with two items. 

  • Item 10 is based on a product hierarchy (SALES_PRODUCT _HIE), node (2025_S1) , with special price agreement 10% of discount.

contract items.png

contract-10.png

 

  • Item 20 is based on a procuct (PRODUCT_C) with special price agreement 15% of discount.

contract-20.png

The product hierarchy (SALES_PRODUCT _HIE) structure is attached below as a reference.

PH-master.png

 

To apply the special price agreement from sales contract to a sales order

  • You could create a sales order first and later assign the sales contract to the sales order so that the special price agreement will apply.  You only need to enter the contract number, the items could be assigned automatically. For contract item auto assignment, please check a system demo in this video:

 

Automatic Sales Contract Item Assignment to A Sales Order based on Product Hierarchy

 

  • You could also create a sales order with reference to a sales contract with product hierarchy. Please check the video below for the details.

 

Create Sales Order with Reference to Sales Contract with product Hierarchy

 

In summary, product hierarchies are often necessary and helpful to organize products along multiple levels in sales process. For more details on product hierarchy basics, you may reference this blog - Introduction to Product Hierarchy in SAP S/4HANA Cloud