Classification and Merchandise Categories

A class (classification system) is a group of similar objects described by their common characteristics. Among other things, objects can be articles, batches and documents.

The class type is a class that has been subdivided according to various objects and organizational areas. In the classes that belong to a class type, there are only objects of one type, for example, sites.

The class type controls, among other things, whether multiple assignments of a site or site groups respectively to other groups are allowed or not (grouping or hierarchy).

The controlling of the class types relevant to retail is done in customizing (IMG:→Logistics-General→Basic Data Retail→Applications). The settings made here are valid for all clients. This function is used to define the class types which are used by the respective applications. As a result of this customizing setting for example for application 03 Promotion and Allocation Table, the system provides the three class types 011, 030 and 035 in the Allocation Table Create transaction (WB50).

Any number of hierarchy levels can be created in the SAP classification system.

When you set up a class hierarchy, the characteristics of the higher-level classes are also inherited by the lower classes. Inherited characteristics are flagged with a special indicator. You can use this indicator to show from which class a characteristic has been inherited.

Characteristic inheritance is the transfer of a characteristic and its values to all the lower classes in the class hierarchy.

Assignment to Applications

For each application, a class type (or several) can be assigned. This setting specifies which class types are actually used, for example by an application running on site groups.

Example:

The allocation table application "03 Promotion and Allocation Table" can use site groups, which were either created for class type 030 (site grouping) or for class type 035 (site hierarchy), as per above picture. In the allocation table, the site group of the allocation table item defines which sites will receive merchandise through the allocation process.

A merchandise category hierarchy always consists of a top node and hierarchy levels arranged under this node. Each (base) merchandise category can be assigned to one merchandise category hierarchy level. There is no limit on the number of hierarchy levels that can be created.

Within a merchandise category hierarchy, the merchandise category of an article is always the lowest merchandise category hierarchy level. Articles are always assigned to the merchandise categories, and never to the hierarchy levels.

The levels in the merchandise category hierarchy are numbered bottom up: The hierarchy node directly above the merchandise category belongs to level 01, the next higher to level 02, and so on.

Merchandise category hierarchies are formed when individual hierarchy levels are assigned to each other.

There are two types of hierarchy levels:

• Merchandise categories: You can only assign articles and, if applicable, characteristics profiles to merchandise categories

• Merchandise category hierarchy levels: You can only assign merchandise categories or other merchandise category hierarchy levels to merchandise category hierarchy levels

You can assign a merchandise category reference article to every merchandise category. You can then use it as a template when you create articles. A reference article can be assigned to more than one merchandise category. The merchandise category reference article is not transferred to Point of Sale (POS) systems, and therefore cannot be an article that is used operationally.

You can also create and assign a merchandise category value-only article for each merchandise category, which makes inventory management on a value-only basis possible at merchandise category level. The merchandise category value-only article can be used for merchandise category transactions at the POS.

For example, this could be used for remainders of one-time promotional merchandise, which should be sold off after the promotion ended. These articles are posted to the value-only article to clear their individual stocks, and are then sold off "anonymously", that is just by capturing their retail price at POS. The value-only article is linked to a merchandise category key of the POS system.

A merchandise category hierarchy value-only article can also be defined for each hierarchy level. This enables you to use inventory management on a value basis at merchandise category hierarchy level.

Characteristics can be assigned to hierarchy levels as well as merchandise categories.

Another option for assigning (several) characteristics is using characteristics profiles. They are created as classes, and are then assigned to merchandise categories. Characteristics profiles are used for the specialization/segmentation of the merchandise category and its characteristics.

You can assign more than one characteristics profile to a merchandise category. In turn, a characteristics profile can be assigned to more than one merchandise category. Every article must be assigned to exactly one merchandise category.

The lower hierarchy levels inherit the characteristics that are assigned to the higher hierarchy levels above. This is called Characteristic inheritance.

The characteristics and their values are then available for the articles for informational purposes, that is, the characteristic value assignments can be used in analyzes and reports.

Variant-creating characteristics for generic articles are assigned in the configuration class 300. Details will be discussed later in the Characteristics and Generic Article lessons.

Otherwise, the characteristics profile has no operational effect in the Retail system as a whole. It is not important in the Logistics or Retail Information System and it does not carry any other information.

How to Create a Merchandise Category Hierarchy

You create new merchandise category hierarchy levels by just maintaining the basic data (mandatory view). The maintenance of all the other views is optional. Next, you need to assign the merchandise category hierarchy levels one under another in the correct sequence (top-down assignment).

When you create a merchandise category, you can make several assignments, such as assigning a default department, or an existing merchandise category reference article. Of course you can alternatively create an own reference article for your new merchandise category. Please note: The merchandise category value-only article, and the merchandise category reference article are created from the merchandise category transaction. The relevant push buttons can be found on the selection screen. The system then opens the article maintenance transaction accordingly.

You assign a level 01 merchandise category hierarchy node to the merchandise category.

If necessary, you assign characteristics profiles to the merchandise category.

When creating characteristics, you have to define the data type, for example character, or numeric format, then you can maintain the characteristic values accordingly. Characteristics can be assigned to merchandise categories, hierarchy levels, characteristics profiles, or other classes.

If you want to assign a characteristic to a merchandise category or a merchandise category hierarchy level, note that the characteristics are assigned via the relevant merchandise category (hierarchy) maintenance transactions.

Existing merchandise category hierarchies can be displayed with the Classification System Hierarchy Display transaction (CL6C).

The assignments and their effects:

• Department: The department where the merchandise category’s articles can be found.

• Assortment length: Relation for the definition of standard allocation rules in the retailing system.

• Price list category assignment: To determine the right price for an article in the site. Via price lists, a number of sites can use the same article retail prices.

• Pricing strategy: For generating a suggested price from competitor prices in sales price calculation.

• Class type: Relates to the groups of competitors.

• Groups of competitors: The competitor group can be assigned here to identify which competitors’ prices should be used to generate a suggested price (see pricing strategy).

• Requirement groups: A replenishment requirement group can be used to define replenishment master data on article/site level (kind of mass maintenance option).

• Store procurement profile: Relevant for replenishment and store order functions. Controls the parameters for store procurement, especially which kind of follow-on documents should be generated.

• Revaluation profile: This describes the sales price revaluation process.

• Inventory management on a value-only basis: This establishes whether stock is managed on an article or merchandise category basis.

• Exceptions in inventory management: When inventory management is defined on a value-only basis, individual articles can still be managed on an article basis.

• Supplying sites: A merchandise category specific supplying site takes precedence over the general supplying site in automatic supply source determination.

Basic Principles of Inventory Management on a Value-Only Basis

In value-based inventory management, goods movements are not posted on an article basis. There is no quantity-based, but only a value-based update which is posted to a value-only article. To find the value-only article for posting, the system uses value-only article determination.

A value-only article can be created for each merchandise category. To fine-tune inventory management on a value-only basis in a merchandise category, several group articles can be created for this merchandise category.

A merchandise category hierarchy value-only article can be created for a merchandise category hierarchy node. It therefore incorporates all articles of the merchandise categories under this node. If a store uses cross-merchandise-category inventory management, you must decide on a merchandise category hierarchy level on which the inventory management is to be carried out. Without this limitation, sales values that do not make business sense may appear - especially in statistics showing comparisons between sites.

In the store, you use the "IM Profile" in the Valuation/Inventory Management view of the site master to determine the type of inventory management to be used for the store in question. Eight profiles are delivered in the standard system; these cannot be changed. Within a merchandise category on value-based inventory management, you can post some articles on an article basis, for example, when these are particularly valuable items.

You can define your own profiles by copying one of the existing profiles (using the customer namespace). In the copy, you can set the Value-only mat. free indicator. This way, every value-only article can be used in any hierarchy level.

Valuation at retail must have been activated in the store.

Changing the assignment of an article or a merchandise category within the merchandise category hierarchy is known as 'reclassification'. You may need to change assignments for the following reasons:

• When an article was created, it was assigned to the wrong merchandise category due to an input error.

• Articles, which have turned out to be special articles in a merchandise category, must be assigned to a special merchandise category. For example, expensive cheeses in the Dairy Products merchandise category should be reassigned to the Delicatessen merchandise category.

• A merchandise category or merchandise category hierarchy level is too large, and therefore is not manageable and needs to be divided up. Articles or merchandise categories in the old level are reassigned to a new one.

• You want to restructure objects against the background of the Efficient Consumer Response (ECR) or the introduction of Category Management.

The SAP system gives you two reclassification options:

• If you want to make extensive changes, you can use Material and Material Group Reclassification.

• If you just want to change the assignment of individual articles, rather than the assignment of whole article areas or existing merchandise categories, you should use the Material Reclassification function, which is simpler to use. Article reclassification is allowed for the Single Material, Generic Material with Variants and Structured Material article categories.

Possible reclassification processes:

• Reassigning Articles

  An article is assigned to another existing merchandise category. It is also possible to split a merchandise category by creating a new merchandise category and moving a number of articles from one merchandise category into this new one.

• Reassigning Merchandise Categories

  Entire merchandise categories are moved across the same level in the hierarchy tree. All the elements and subtrees below the merchandise category are moved with them.

• Reassigning Hierarchy Levels

  Entire merchandise category hierarchy levels are moved on the same level in the hierarchy tree and all the subordinate objects are moved with them (this includes merchandise category hierarchy nodes, merchandise categories, characteristics profiles, generic articles, articles and variants).

You can reclassify the Single material, Generic material and Structured material article categories. The generic material is moved with all its variants.

The system runs many checks during reclassification, for example, whether characteristics and characteristic values have the same source and destination, whether stocks are available, and so on.

The system:

• Makes assignments in the merchandise category hierarchy itself

• Assigns an article to the merchandise category

• Assigns open purchase order items to merchandise categories, if required

• Adjusts the assortment module assignment

• Adjusts an inventory-management value-only article of a merchandise category hierarchy level

You can create a reclassification version of selected objects for a certain date. In this case, the changes are not actually written to the database - the reclassification is merely simulated, and the version would have to be activated then for actual processing.