What you can see, you can use.

Or so goes the thinking behind a very useful tool in the ERP (enterprise resource management) toolkit: the merchandise hierarchy.

This tool has no impact on anything a customer would see (such as a product catalog), and yet on the back-end, it can be very helpful to a business -- providing actionable insight for smarter business decisions.

So get your competitive edge on and take a look at why (and how) to use a merchandise hierarchy in NetSuite.

Merchandise Hierarchy Overview

A merchandise hierarchy empowers a business with a holistic view of customer demands.  Rather than to just see items that sell/SKU numbers, or profit margins by item, setting up a merchandise hierarchy allows for subcategories of products (known as nodes).

You can use merchandise hierarchies to:

  • Organize inventory into useful categories and subcategories, all the way down to individual items.
  • Run reports with easily visible categories, for comparisons and insight which fuel smarter decision making.
  • Understand inventory by specific (customizable) attributes (such as color, size, material, etc).
  • Utilize inventory insight to avoid potential on-hand/quantity issues before they become a problem.
  • Capture hierarchy “versions” for seasonal industries, where you may wish to compare a particular time of year to that same time of year other years, instead of continuously to prior quarter.

While a merchandise hierarchy may take a little time to set up (depending on your inventory), many NetSuite’ users find it to be one of the most useful, pragmatic and insightful tools in any ERP toolkit.

Reports and Functions Available

Most industries will only need to set up one version of their merchandise hierarchy, and then utilize its insights indefinitely.

But then, Oracle + NetSuite listens to users and understands that some industries have unique needs. For example, a shoe company, might have dramatic differences in inventory by season, where boots and galoshes sell at a certain time of year, but are categorized as off-season merchandise when sandals fit the upcoming weather..

For such industries, setting up versions of merchandise hierarchies may be useful -- you can then run reports and comparisons with the hierarchy tool, against prior years (same season), instead of in a continuous comparison.

Some of the other reports available in the merchandise hierarchy include:

  • Sales By Item report -- Breaks down a report with every hierarchy listed, providing a simple, visual identification of items responsible for the greatest revenue.
  • Purchase By Item report -- Provides the quantity and purchase cost for items, broken down within the hierarchy departments. Can operate as a companion to the Sales By Item report, providing a comparison between customer demand and profit.
  • Current Inventory report -- Shows both how many items are on-hand, and how many are on order, making inventory management more straightforward and useful than ever before.

One can run these reports, save searches, apply filters and more.

Because of the fully-integrated database of Oracle + NetSuite, the actionable business intelligence of merchandise hierarchies also link to every other feature in the NetSuite universe -- you can just click on an item to get directed to the complete subdata of that product.

Access the merchandise hierarchy manager in NetSuite under setup > merchandise hierarchy > hierarchy manager.

For a visual tutorial of merchandise hierarchies in NetSuite, check out this video on YouTube.

SCS Cloud Knows NetSuite

At SCS Cloud we are passionate about empowering our clients to make the most of the digital tools available for businesses. 

Retailers, eCommerce, B2B sales and other industries can utilize the merchandise hierarchy functionality in NetSuite to reduce inventory costs, increase profit margins and drive sales.

We can help you implement, train or even custom develop tools to empower your business.

Contact us for a free consultation and leap ahead of the competition.

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