Product hierarchy

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.