Similar to the way an SAP Sales document type determines the nature of the sales order transaction, an item category determines how a line item in a sales transaction behaves.
Just like the way a sales document type determines the way the document behaves ( If its a standard order, contract, quotation etc ), the item category controls how the item should behave in terms of
- If the item is relevant for Billing ?
- If the item is relevant for Pricing ?
- If schedule Lines are allowed for the line item
- If the value of the line item should be considered for credit management
- If the type of item is relevant for special stock ( In case of consignment, empties management etc )
- Whether a BOM ( Bill of Material ) should explode or not
- The relevant text determination, partner determination procedures, status profile etc.
Let’s see some examples
Let’s say you are buying a Honda CRV vehicle. You would select the different options that would make up the vehicle including the model, wheels, power options, other service options like extended warranty etc. Each of these line items represent different type of items and the way they behave is very different from each other through the course of the logistics and financial cycle.
For example, Honda CR-V could cost you 25 K but the options themselves ( Model, Alloy Wheels might just cost zero dollars ). Or the top item Honda CRV could cost zero dollars, whereas the total cost could be an addition of all the sub-items inside it.
As shown in the example picture above,
- TAC – Configurable Item. Used as the top item in a BOM
- TAN – Standard item. Is typically deliverable, counts for the credit limit, is relevant for billing and has the standard text and partner determination procedures.
- TANN – Free of cost items. ( Let’s say that if you opt for heated seats, he will offer you free seat covers.
- TAD – The 3 year service warranty is a service item. It is not relevant for delivery , but is relevant for billing and credit as well. There are other implications of these kinds of service items, but for the purpose of item categories we need to understand that this is just another item category.
The configuration for item category involves
- [VOV7] Defining Item Categories
- Define Item Category Groups
- Define Default Values for Material Types
- Define item Category Usage ( Rarely Used )
- [ VOV4] Assign Item Categories OR Item Category Determination
The menu path for the same is [ SPRO -> IMG -> Sales & Distribution -> Sales -> Sales Document Item ]
We will only be dealing with the first configuration option ( ” Define Item Categories” ) in this article. The rest of the configuration will be dealt with in item Category Determination.
There are many standard SAP provided item categories. Some important ones are listed below and there are many more.
|TAN – Standard Item||TAB – Individual Purchase Order||TAD – Service|
|TAS – Third Party Item||TATX – Text Item||TANN – Free of Charge|
|TAC – Variant Configuration||AFX – Inquiry Item||AGX – Quotation Item|
|BVN – Cash Sales Item||L2N – Debit Memo Req. Item||G2N – Credit Memo. Req. item|
Let’s take the standard item category TAN and dissect it.
This is the most important section of the item category configuration. Not all fields tend themselves to be understood easily unless the underlying concepts are understood. For example, if you do not understand the concept of Revenue Recognition ( which is a big subject in itself ), there is no point in trying to understand the key “Revenue Recognition” at the bottom. So, in this article, we will try to explain the simpler things and leave the rest to later articles. Sometimes, links will be given to other articles for further reference.
Completion rule is mostly used in Pre-Sales documents ( Like Quotation, Contracts etc ) to determine if the reference to the line item is complete or not. For example, if you create a quotation for a material M-01 with quantity 10 and a subsequent order is created for a quantity of 5 referencing the quotation.
The quotation’s line item is not fully referenced yet ( There is 5 more qty left ). After you create another order for the remaining 5 qty, the quotation will be fully referenced as seen from the picture above. This switch is not relevant for the standard item category TAN as mentioned above, but more relevant for AGN etc. The various options possible are
- ‘ ‘ Not relevant ( This is the option that is used for TAN )
- A – Item is completed with first reference ( Meaning, the quantity need not be fully referenced. This could be a case when you want the quotation to be complete even though the total quantity is not fully referenced )
- B – Item is completed only the full quantity is referenced. This is the example shown in the picture above.
- C – Item is completed after the target quantity is fully referenced. ( Target quantity is the term that is used in Contracts typically )
- D – Item is referenced via contract release.
- E – item is completed after full target value is referenced.
Schedule Line Allowed
Schedule lines are allowed only for line items that need to be delivered. For example, the line items in sales documents like contracts or quotations cannot be delivered (until subsequent orders are created ) and hence the line items are not relevant for delivery. So the corresponding line items like AGN are not check marked with Schedule Lines Allowed. Other examples include credit and debit memo item categories like L2N or G2N.
Examples of special stock are consignment, project stock etc. The way this line item is handled is very different from standard orders, contracts, quotations etc. Hence this indicator is specially used only for item categories corresponding to special transactions like customer consignments, vendor consignments, project stock etc.
Not all items should be automatically billed. For example, a comcast installation with different items cannot be billed until the installation is complete and confirmed by the service personnel. So item categories like service that cannot be billed automatically can be put on billing block. The reason codes for the billing block can be configured elsewhere.
Not all items are relevant for pricing. The standard requirement 2 in pricing procedure checks if the item is relevant for pricing or not. If this switch in the item category is set to blank, then the line items will not be relevant for pricing.
In documents like quotations or contracts, the value of the document should not be used to calculate against credit management – Because, many quotations can be sent to the customer , but they should not be counted against their credit limit. Use this option in the item category when setting item categories for sales documents that does not require credit. Similarly in a standard sales order, if there is a particular line item type that is not relevant for credit, then this option can be used.
This section contains multiple determinations like the incompletion procedure, partner determination, text determination and status profile. You can read further about these by clicking on the links above.