Master Data Setup for Hierarchical Planning 
Purpose
Since you run the SNP heuristic and SNP optimizer at product group level in hierarchical planning, you first have to create the relevant master data for running the SNP heuristic or SNP optimizer. For more information about this, see Master Data Setup for the Heuristic and Master Data Setup for the Optimizer. There are also details regarding master data maintenance that are specific to hierarchical planning.
Note that you have to maintain all the master data at both product level and at product group level; you cannot automatically generate the product group level from product level.
Process Flow
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1. You create products and locations.
The following details apply to hierarchical planning:
¡ You run hierarchical planning on the basis of a location product group. To create this location product group, you first have to create a product group and a location group. These groups consist of individual products or locations that are grouped into hierarchies (see step 3). You create all the levels of these hierarchies as standalone products and locations in the product and location master data. The location product at the head of the location product hierarchy represents the location product group on which you are basing hierarchical planning.
¡ If you want to plan multiple levels (locations) of your network, the same product groups should be defined in all locations. There should not be any cycles in your network.
¡ SNP disaggregation takes into account the rounding values and lot size parameters defined for the individual products and product groups. If you want to ensure that during SNP disaggregation there are no remainders at product group level, the rounding values defined at product level must be the same within a group. The rounding value of the product group must be a multiple of the value at product level. In addition, the minimum lot size at group level should be larger than or equal to the minimum lot size defined at product level.
¡ The procurement type defined at product group level should also be supported at product level.
¡ The same SNP production horizon, extended SNP production horizon, and SNP stock transfer horizon should be defined for all products of the product group (including the header product and product group).
2. You create resources, production process models (PPMs), and transportation lanes.
The following details apply to hierarchical planning:
¡ For optimization-based planning, you always have to also create a resource at product group level. The SNP optimizer uses the resource and costs defined at product group level for hierarchical planning. Creating resources is optional for the SNP heuristic.
¡ To ensure that the resource consumption of fixed orders at product level is correctly taken into account during planning, note the following restrictions for creating resources:
§ You should use the same resources at product level and product group level.
§ The resource consumption of the PPMs and transportation lanes at product level and product group level should be similar.
¡ The total of the resource capacities defined at product level should form the resource capacity at product group level. If you are using several PPMs at product level, the total resource consumption of the different PPMs at product level should form the PPM’s resource consumption at product group level.
¡ You cannot automatically generate PPMs at product group level from the PPMs at product level; you have to create the PPMs individually for the product groups.
¡ For external procurement, since SNP disaggregation uses the source determination decisions from product group level, the same transportation lanes must apply for the product group and the individual products.
3. You create hierarchies.
To create a location product group, you first create a product group and a location group using hierarchies; that is, you create a product hierarchy and location hierarchy in Customizing for SAP APO master data. You then generate a location product hierarchy from the product hierarchy and the location hierarchy. The location product representing the location product group is at the top of this location product hierarchy.
You can create the location product group as a location group for a product or a product group for a location, for example. In the first instance, you have to create a location hierarchy with a header location (the location group) and several subordinate locations, and a product hierarchy with a header product (the product group) and only one subordinate product. In the latter instance (to create a product group for a product), you have to do the opposite. The graphic below provides an example of the different possible combinations:
Location Product Hierarchy Example
In this example, the product hierarchy consists of product group A with the subordinate products B and C. The location hierarchy consists of location group 1 with the subordinate location 2. There are also location products A/1, A/2, C/2, and B/3, and location 3. The generated location product hierarchy consists of the following levels: Product group/location level (level 1) and product/location level (level 2). A/2 is located on level 1 and C/2 on level 2. C/2 is a component of A/2. A/1 is not a component of the location product hierarchy since the product group/location group level was not defined in the generated hierarchy. B/3 is not a component of the hierarchy since location 3 is not a component of the location hierarchy and nor are there any product group/location nodes for B/3 (which would then have to be called A/3).
With in-house production, you also have to create a PPM hierarchy at product group level for every PPM since SNP disaggregation uses source determination decisions from product group level. The PPM hierarchy should be consistent with the location product hierarchy.
For more information about creating hierarchies, see the 
