Issue

Standardization and harmonization of the Finished Goods (FG) Product Hierarchy across all business units, with alignment to SAP standard 3-tier product hierarchy.

Recommendation

After assessing the three options, Option A Adopt Standard SAP 3-Tier Product Hierarchy (MARA-PRDHA) with Enrichment via Standard Material Master Fields is recommended.

Rationale

• Promotes enterprise-wide consistency and simplification
• Aligns with SAP best practices and future-proof architecture
• Reduces technical debt and manual maintenance
• Provides a balanced approach retains SAP standard hierarchy while allowing GBUs the flexibility of a 5th-level equivalent.
• Ensures compatibility with SAP core modules, embedded analytics, and external systems, avoiding the integration risks inherent in a non-standard 4-tier hierarchy.
• Keeps governance, performance, and maintenance efforts manageable, while still meeting business requirements for added segmentation.
• Supports long-term sustainability by avoiding custom developments that could increase technical debt.

Background & Context

Currently, multiple business units maintain their own customized, inconsistent Finished Goods product hierarchies, each with 5–6 levels. These hierarchies differ in structure, naming conventions, and governance processes. They are often maintained using non-standard SAP fields, leading to:

• Inconsistent reporting and analytics across the enterprise
• Redundant or duplicated master data
• Increased complexity in governance and maintenance
• Incompatibility with standard SAP functionality (e.g., pricing, profitability analysis, S/4HANA reporting, Fiori apps)

There is a business need to standardize and harmonize the product hierarchy to enable unified reporting, streamlined processes, and reduced master data complexity.

Assumptions

Constraints

Impacts

Business Rules

In Syensqo the 3 levels of the product hierarchy (MARA-PRDHA) will represent:

• Level 1: Product Family - The highest-level classification, used to group broad categories of materials or goods.
• Level 2: Product Line - Subset of product family; includes materials that share similar physical or chemical characteristics, which may be produced on similar assets.
• Level 3: Product Group - A more focused group of related materials within a family and line, differentiated by form and/or formulation, and in some cases asset.

The material master attributes fields that will be used:

• Sales Material Group fields: Where applicable, a smaller group with specific variations to allow grouping for product asset allocation and further refine product formulation differentiation where needed.
• Basic Material: Classifies the material with unique manufacturing and/or selling specification, regardless of package type.

Maintenance governance:

• Ownership: The Product Hierarchy will be managed centrally to ensure consistency, compliance with standards, and controlled evolution.
• Business Rule: Product Hierarchy management shall be centralized and executed exclusively by a designated configuration expert, based on formal requests submitted by authorized teams. These changes can be performed in specific periods for (quarterly) to ensure stakeholders remain alert to requests and avoid impact during critical result analysis periods. The product hierarchy will be represented in a matrix format to ensure consistency and standardization.
• Requesting Teams: Update requests may pass through Product Asset Management and Technology and Strategy teams.
• Approval: All updates must be reviewed and approved by the Finance team before implementation.
• Execution: The configuration expert will implement approved changes in SAP S/4HANA, ensuring alignment with governance guidelines and system stability.

Options considered

Option A: Adopt Standard SAP 3-Tier Product Hierarchy (MARA-PRDHA) with Enrichment via Standard Material Master Fields

Define a new 3-tier product hierarchy in SAP S/4HANA (MARA-PRDHA) and enrich it with a standard material master fields Basic material and sales Material groups. This approach preserves SAP best practices while introducing an additional dimension of flexibility, allowing GBUs to fine-tune the product hierarchy.

Pros:

• Maintains full alignment with SAP standard capabilities, minimizing risk of non-standard development.
• Provides flexibility for GBUs to manage segmentation with a 4th-level equivalent.
• Ensures compatibility with core modules, embedded analytics, and external systems.
• Supports reporting, profitability analysis, and data extraction to BW/4HANA or SAP Analytics Cloud.
• Keeps governance, performance, and maintenance efforts manageable.

Cons:

• Requires business alignment on how the standard field is to be used and governed across GBUs.
• Some GBUs may see it as a compromise solution compared to a true 4-tier model.
• Additional data governance discipline is needed to ensure consistency in using the enrichment field.

Assessment: ✅ Recommended. Aligns with long-term strategic goals and SAP roadmap. Supports enterprise harmonization and operational efficiency.

Option B: Retain "As-Is" Approach with Disjointed, Non-Standard Fields

Each business unit continues to maintain its own custom hierarchy structure (5–6 levels), stored in custom fields or Z-tables, outside the standard SAP product hierarchy (MARA-PRDHA).

Pros:

• No need to change current business processes
• Maintains local control and familiarity for business units

Cons:

• No centralized governance
• Inconsistent hierarchy logic across BUs
• Complex integration with reporting tools and downstream systems
• Not compatible with S/4HANA embedded analytics, Fiori, or standard SAP content
• Increased data maintenance effort and risk of redundancy
• Not scalable for enterprise-level reporting or AI/ML use cases

Assessment: ❌ Not recommended due to poor alignment with SAP standards and high long-term cost/complexity.

Option C: Global Hierarchies solution in SAP S/4HANA

The Global Hierarchies framework allows for enterprise-wide standardization and harmonized reporting without being limited by the 3-level restriction of the classic product hierarchy (MARA-PRDHA).

Pros:

• Flexibility: Supports hierarchies of virtually unlimited depth.
• Analytics integration: Seamlessly connects with SAP Embedded Analytics, BW/4HANA, and SAP Analytics Cloud.
• Global standardization: Enables consistent structure and reporting across geographies and business units.

Cons:

• Integration effort: Requires additional mapping or transformation for non-SAP systems.
• Reporting effort: Values aren’t copied to sales documents so it would require additional effort to map it sales and controlling reporting.
• Maintenance governance: Maintenance isn’t performed at material level.

Assessment: ❌ Not recommended due to integration limitations with external systems that would require additional mapping, transformation, adding cost and complexity.

Option D: 

Evaluation

	Option A	Option B	Option C	Option D
Flexibility:	Provides flexibility for GBUs to manage segmentation with a 4th-level equivalent.	Inconsistent hierarchy logic across BUs	Supports hierarchies of virtually unlimited depth.
Analytics integration:	Supports reporting, profitability analysis, and data extraction to BW/4HANA or SAP Analytics Cloud.	Not compatible with S/4HANA embedded analytics, Fiori, or standard SAP content	Seamlessly connects with SAP Embedded Analytics, BW/4HANA, and SAP Analytics Cloud.
Global standardization:	Maintains full alignment with SAP standard capabilities, minimizing risk of non-standard development.	No alignment with SAP standard capabilities, maximizing the risk non-standard developments.	Enables consistent structure and reporting across geographies and business units.
Integration effort:	Maintains full alignment with SAP standard capabilities, minimizing risk of non-standard development.	Complex integration with reporting tools and downstream systems	Requires additional mapping or transformation for non-SAP systems.
Reporting effort:	Ensures compatibility with core modules, embedded analytics, and external systems.	Not compatible with S/4HANA embedded analytics, Fiori, or standard SAP content Not scalable for enterprise-level reporting or AI/ML use cases	Values aren’t copied to sales documents so it would require additional effort to map it sales and controlling reporting.
Maintenance governance:	Centralized governance at material level	No need to change current business processes and maintains local control and familiarity for business units No centralized governance and increased data maintenance effort and risk of redundancy.	Maintenance isn’t performed at material level.

See also

Change log