Managing global product hierarchies for an organization can be a huge challenge, especially when there are multiple systems & no ownership of managing the hierarchies. This blog is not to provide more information on importing or syndicating hierarchies, but I have tried to explain how management of complex hierarchies can be a strong business case while implementing MDM.

The need to manage Product Hierarchy
Any organization offering products or services for sell, need to categorize there offerings systematically. A simplistic way to group different products is by grouping them in distinct Product Lines. But many times this high level grouping does not suffice especially for organizations have a large exclusive product offerings. Hence, it is necessary to drill to a logical level of hierarchy where a finished good can be linked. This can be achieved by creating a logical hierarchy which can not only help in categorizing the Products but also in analytics & forecasting.

Building a Product Hierarchy
Few points to keep in mind while building a product hierarchy:

1. Applicable globally for the organization
2. Covers all Products & are categorized uniquely
3. It should be at a logical level & recommended not more than 5 levels

A product hierarchy can be built by grouping products by Line, Type, Family, Group, Series etc. The order & the levels of these categories must be identified carefully so as to avoid expansion or repetition of nodes.

Strong capabilities of SAP MDM
SAP MDM comes with a strong mechanism to build, manage hierarchies & is one of the strong business cases for implementing MDM in organization. MDM allows you to easily manage complex product hierarchies, import it from excel files & automatically create a tree structure.

SAP MDM provides features to add sibling, child, sort the tree etc. This makes it a strong tool. Additional functionalities like Taxonomy, Images etc add to the strength of the tool. Capability of SAP MDM to trigger Workflows on hierarchy table help in better management of hierarchies. 

Though Product hierarchy is a lookup reference data for master data objects like Material & Products, it still can be managed centrally using SAP MDM. Syndicating the changes / additions in hierarchy can be easily managed using SAP MDM & can help in having a synchronized, unified hierarchical product classification. Further, it can also be leveraged during Catalog Management, SRM & with BI to perform analytics.