PRODUCT HIERARCHY CODES

A Product Hiearchy (PH) Code is assigned to each material in SAP.

This code is GLOBAL, in that it is the same for the material in all sales organizations and plants in SAP.
This code is used to group and classify materials for reporting and pricing execution.

The Product Hiearchy Code consists of 3 portions:

Level 1 2 3
Product Hierarchy = Business Group Product Line Foreclass Code
(4 characters/digits) (3 characters/digits) (5 characters/digits)
BG PL FCL
Abbreviations PH1 PH2 PH3

Business Group that owns Typically used for product

Product group or
Part indentification marketing reponsibility families, versions, and part types
application
(pricing, availabililty, etc.) (top levels vs. components)

ICS-US uses for general price

adjustments;
ICS-US uses for general
Pricing ICS-Europe uses to set local sell
price adjustments
price (US retail plus a regional
factor for each FCL)

ICS-US uses for some

discounts by groups of ICS-US and ICS Europe used for
Discounts
customers (e.g. various customer discounts
distributors)

Can be used across BG's and PL's,

Typically unique to BG, but
but should be unique if parts
Uniqueness Unique to Business Group can be shared across
should be priced differently in
related BG's
different families.

Notes:
1) ICS historically used unique PH codes to group top level products, but were not consistent in how we coded
service parts. Some business groups coded both top levels and service parts together. Some business groups
coded all service parts for all part families together. This made it difficult to evaluate profitability by product
family inclusive of related service parts. It also made it more complex to apply different pricing strategies.
2) As part of an FY13 Strategic Deployment Action Plan, ICS is restructuring our Product Hiearchy codes to:
a) more easily group all materials in a product family for profitabiilty analysis;
b) identify components and service parts by product family so we can apply different pricing strategies for
products in different lifecyle phases (e.g. new products vs. products being phased-out) or market conditions
(e.g., proprietary vs. commodity parts);
c) develop a standard structure across business groups.
 ICS PH Code Structure

PH1 PH2 PH3

Bus Grp Prod Line Foreclass Code

PH Code = BBBB WWW XX YY Z

Divide As Needed for BG Product Groups Product Families Part Types

Business Groups BBBB Product Lines WWW FCL1 XX FCL2 YY FCL3 Z FCL3 Description/Guideline Examples
AUTOMOTIVE AUTO examples: examples: familes and 00 TOP LEVEL 0 Top level products. Include both packaged & unpackaged assemblies.
CONTAINER CONT versions for each COMPONENTS 1 Nonsaleable components or infrequently replaced saleable items.
product group
ETI ETI1 Accessories REPL PARTS 2 Frequently replaced/wear items, competitive parts. pump packings, venturis,
LIQUID LIQD Guns KITS 3 Service kits that contain different service parts that need to replaced together svc, retrofit and upgrade kits.
POWDER POWD Controls ACCESSORIES 4 Items used "with" a product but not contained in the product.
Sealant Equipment SEE1 Mobile Systems 5 use as needed for BG
SPECTRAL SPEC Pumps 6 use as needed for BG
UV Systems Group UVSG Booths COMMODITY 7 Off the shelf, readily available anywhere, not critical to get from Nordson fasterners, pneumatic fittings, electrical components
PROPRIETARY 8 Unique to Nordson, low or no competition; high value and/or critical to system. multipliers, circuit boards, rotary cups, pattern control
etc. 99 COMMON PARTS 9 Parts that are used across product lines

Keep unique to BG Keep unique to BG Not unique Standard across all ICS BG's
Can be repeated for each FCL1
Guide for Maintaining Product Hierarchy Structures and Assignments

1. Your structure is a living document.

Build in room for your product offering to grow.
Make changes as needed as your product offering evolves.
Document all "rules" for mapping your products to help maintain consistency between users.

2. Create only the codes you need.

The structure maps how to configure your PH Codes, but not every combination will be needed.
Create new codes only when you have products to assign to them (e.g., beginning of ECO process for new releases
All new product should use the new structure - don't wait for a full "cleanup" to start using the new structure!

3. Check current PH code assignments for available combinations. Digits can be alpha or numeric if you need more choice

4. Keep multiple versions within families together in FCL2 series (decade).

5. Use a "common" assignment for products that can be used across multiple equipment types or families. (e.g. first numb

6. Have the right level of granularity (not too little, but not too much). Consider what products should be easily identified
New products: Adoption tracking, promotions, pricing.
Phaseout: Usage tracking, inventory reporting, phase-out pricing.
Existing Equipment: Product segmentation, pricing review/annual changes.

7. FCL3 assignments:
At minimum, identify your Top Level products (0) and Replacement Parts (2).
All other FCL3's are intended to help further segment your products if known and appropriate.

8. Strive for consistency rather than perfection.

Don't spend too much time trying to make your code assignments "perfect" before using them.
Be consistent in your mapping rules and document them in your structure file for other users.

9. The PH Code assignment does not replace BOM review.

Although the PH code will help identify unique equipment, it will not be perfect, especially as products evolve.
Product BOM usage ("where-used") should always be reviewed to confirm assignment when needed, such as for p

10. Be mindful of other areas that use your PH codes before making changes.
Pricing tied to PH (E.g. Europe regional pricing, customer or product discounts).
Reporting tied to PH (e.g. Powder PCI reporting).
 process for new releases.)
ng the new structure!

ic if you need more choices.

or families. (e.g. first number in family decade).

should be easily identified by the PH code:

y as products evolve.
hen needed, such as for phase-out or inventory decisions.