NetSuite ERP Merchandise hierarchy: Unlocking Efficiency and Visibility

In the ever-evolving AFA retail industry, effective management of products and assortments is essential for success. One powerful tool that can help retailers optimize their operations is the merchandise hierarchy feature in NetSuite. In this blog, we will explore the concept of merchandise hierarchy and how implementing it in NetSuite can bring efficiency, organization, and enhanced decision-making to your retail business. 

Defining the Merchandise Hierarchy:

The merchandise hierarchy is a structured classification system that organizes products into logical categories, subcategories, and product groups. It provides a hierarchical framework for retailers to manage, analyze, and plan their inventory, pricing, and promotions.  

How can merchandise hierarchy help businesses?

• Structured Organization

 NetSuite’s Merchandise Hierarchy allows businesses to create hierarchical levels, such as categories, subcategories, and item groups, enabling a logical organization of merchandise, making it easier to navigate and manage a large product catalog by material, color, or other attributes, the reports can provide valuable insights.

• Product Categorization

 With Merchandise Hierarchy, businesses can categorize their products based on various attributes like type, brand, style, season, and more. This categorization simplifies product search and improves inventory management, enabling quick identification of similar products and efficient grouping for reporting and analysis purposes.

• Advanced Reporting and Analytics

 One of the standout features of NetSuite’s Merchandise Hierarchy is its ability to provide comprehensive reporting and analytics. By categorizing products and capturing attributes at each level of the hierarchy, businesses can gain deep insights into sales performance, inventory trends, and customer preferences. This data-driven approach empowers informed decision-making, enables targeted marketing campaigns, and maximizes profitability. NetSuite enables customers to build merchandise hierarchy reports using custom fields, enabling tailored reporting based on specific business needs.

Reports that are accessible within the merchandise hierarchy encompass are Sales by Item report, Purchase by Item report, Current Inventory report.

• Price Management

Managing prices across a diverse range of products can be challenging, but NetSuite’s Merchandise Hierarchy simplifies price management. It allows businesses to set and update prices at different levels of the hierarchy, ensuring consistency and flexibility. This feature streamlines pricing updates, promotions, and discounts, ultimately improving sales effectiveness.

• Streamlined Workflow and Collaboration

NetSuite’s Merchandise Hierarchy integrates seamlessly with other modules, enhancing workflow efficiency and collaboration across departments. It enables seamless coordination between merchandising, inventory management, sales, and finance teams, ensuring everyone has access to accurate and up-to-date product information. This collaboration leads to better inventory planning, optimized order processing, and improved customer satisfaction.

An underrated tool for efficiently managing a successful retail business

NetSuite allows its users to design merchandise hierarchies to represent categorization of items or products during a particular time and assign the items to the hierarchy.

Each merchandise hierarchy is multi-level, with the highest level providing an overall enterprise view which then narrows down to families or classes of products. Hierarchy levels enable users to determine the relationships between items, and hence manage items throughout the enterprise workflow while planning, buying, merchandising, pricing, and more.

The merchandise hierarchy organizes retail products in a pyramid-like structure, starting with the company name at the top and descending through large departments, classes, and sub classes of products. Each level contains nodes representing specific classifications like ABC Electronics, Home Appliances, and Air fryer. Since every business is unique, they have the flexibility to customize the hierarchy according to their preferred organization and can add as many levels as needed.

Primary function of Merchandise Hierarchy is to support detailed reporting that drives informed business decisions. Instead of merely analyzing sales and revenue for a single SKU, the hierarchy allows management to access comprehensive breakdowns, from department-level (e.g. Home appliances) to individual items (e.g. top load washer).

 Hierarchy manager tool is user-friendly tool that allows businesses to easily modify and expand the merchandise hierarchy as required. In NetSuite, you can use SuiteAnalytics Workbook, Report Builder, Saved Searches to analyze sales and item performance. 

Conclusion:

NetSuite’s Merchandise Hierarchy is a game-changer for businesses seeking to streamline their merchandising processes, enhance visibility, and optimize sales performance. By leveraging its structured organization, advanced categorization, multi-channel management, and analytical capabilities, businesses can effectively manage their products, make data-driven decisions, and deliver exceptional customer experiences.