SAP Item Category determination – Zero to hundred

SAP Item Category Determination plays an important role in Logistics. Learn how they are set up and troubleshoot usual problems. Learn what business processes they support.

Knowledge about SAP item category determination is essential if you are setting up Order to Cash or Procure to Pay cycles. In short, item category is used to define the behaviour of an item within a particular document type. The key to understanding and mastering item category determination is the knowledge of the VOV4 and VOV7 configuration tables.

If you are new to the subject and have been asked to work on item categories, I feel confident that, after going through this post, you would be able do the following.

  1. Understand what item categories are and their role in logistics cycle.
  2. Set up a new custom item category and set up their determination process.
  3. Get to know the important tables and associated transaction codes.
  4. Feel enabled to practice further on your own.
SAP Item Category Determination Control Sales Item
SAP Item Category controls various line item behavior

SAP Item Category Determination – Conceptual Understanding

Let us understand item categories conceptually by seeing few day-to-day business cases. We believe that this part of our blog is our unique feature and helps consultants like yourself to gain confidence. Many complex terminologies and settings within SAP can be demystified using this.

Let us say that your company sells virtual products like online gift vouchers or software products like Anti-Virus. Such products do not require delivery or physical goods movement. However, they are relevant for billing and hence the customer must be charged the same.

Consider another case where a product needs to be shipped but is not relevant for billing. Yes, you got it right. Free goods (situations like buy 2 and get one free). Another case is packaging materials which go along with the product and need to be costed for in the margin calculation. Of course, you wouldn’t be charging for the packaging material.

Using item category determination, you would be able to set up these scenarios within SAP. Having understood the importance of item categories, let us look at how SAP lets you set up the determination process.

Find how the order fulfilment works for various types of products. 

Pre-requisites before deep diving into item category determination

We need to be aware of few things before dwelling deep into item category determination. Most likely you would be aware of these concepts, but it is important to revise the same. These parameters determine Item Category determination. We have listed them below.

  • SAP Sales Document Type – SAP Sales Document Types are integral components of the SAP system that facilitate the generation of various documents for sales transactions. These documents encompass a wide array of essential sales processes, including orders, deliveries, invoices, and more. By meticulously configuring SAP Sales Document Types, businesses ensure the seamless flow of data and the utmost accuracy of their sales documents. With robust tools and functionalities, SAP Sales Document Types empower organizations to efficiently manage and streamline customer orders, ultimately enhancing operational efficiency.
  • Item Category Group – The item category group plays a pivotal role in classifying and distinguishing between different types of items within a business. This versatile grouping mechanism enables organizations to categorize items based on various criteria, such as type (e.g., clothing, electronics, furniture), brand, material, color, or price range. By assigning each item to a specific item category group, stores can effortlessly organize their inventory and curate a better shopping experience for customers. Moreover, the item category group significantly reduces confusion and ensures that customers can easily locate and find the items they desire.
  • Usage Indicator – Consider the scenario where a sample product may have different pricing rules, being chargeable at times and free at others. In such cases, the usage indicator proves to be a valuable control feature provided by SAP to configure these dynamic situations. By leveraging this field, businesses can effectively determine the appropriate item category based on predefined rules. The usage indicator can be configured through customization and is maintained in the TVVW view. Another potential application of the usage indicator is for item proposal functionality, further enhancing the flexibility and adaptability of business processes.

Understanding importants attributes of Item Category

These are important attributes of item category. Understanding these, can help you configure you own custom type, as well as get to know the charecteristics of the standard ones.

Item Categories important attributes

Figure – Item Categories important attributes

Item Type

This attribute denotes what type of item the line is. This then helps SAP to do or supress certain functionalities. For example, the item could be text, packaging material, value item. For example, if you have a Service item, it will be value item and will not have relevance to delivery. Text items will neither have delivery not pricing relevance.

Special Stock

This functionality is used for maintaining special stock relevance such as in the case of consignment stock.

Billing Relevance

This field controls the basis on which the item will be billed. The parameter has the following values. For example if you have service items, you will not create delivery for the same and you will bill on basis of the order. Following is the complete list of possible values of this field.

  • A: Relevant for delivery-related billing
  • B: Relevant for order-related billing based on requested quantity
  • C: Relevant for order-related billing based on target quantity
  • D: Relevant for pro forma
  • F: Relevant for order-related billing – Status based on invoice receipt quantity
  • G: Relevant for order-related billing of the delivery quantity
  • H: Relevant for delivery-related billing – no zero quantities
  • I: Relevant for order-related billing – billing plan
  • J: Relevant for deliveries across EU countries
  • K: Relevant for delivery-related partial quantity billing
  • Q: Relevant for delivery-related CRM billing
  • Bill Plan Type

This field is usually left blank when you do not have milestone based or periodic billing. In the case where you bill based on certain milestones (let us say production started, quality inspection, 50% production completion etc.) you can use 01 as the value.

In some cases, your billing is periodic. For example in some service industries you have monthly billing, in which case you will use 02.

Bill Block

In some cases you have billing block for certain items (like credit /debit memo). You can also set billing blocks for cases where you need to review the terms etc.


In some cases you may or may not want to execute the price calculations. For example if you have text items, you may want to leave this as B (100% Discounted).

Business Item

If you check this box, business information at the item level is allowed to be different from that in the header.

Schedule line Allowed

Certain item categories, for example text items may not be relevant for schedule lines. Also certain documents may not require schedule lines (credit memo requests / debit memo requests).

Item relevant for delivery

This means whether the items will be carried forward to delivery document. Even though the items may not be relevant for physical delivery, this allows copying of the line item to sales document.

Relevant for weight/volume

Setting up this flag means that the item category is relevant for weight or volume calculation.

How to configure Item category determination

If you have configured other business processes within SAP, you would have guess by now that, Setting up of item category determination will be done in the following steps.

Setting up Item Categories in SAP

In this tutorial, we will look at how to define a new item category within SAP S4 system. Next we will assign the item category to a sales transaction so that it gets determined at the run time when you enter the line item.

Navigate to the following node within SPRO Sales and Distribution -> Basic Functions -> Sales -> Sales Document item. You will find the following nodes to set up item category determination.

Step 1 – Viewing / Creating item category within SAP system

You can define a new item category here or view an existing one here. In the screenshot below we are seeing a standard item category TAN.

Detailed View of Item Category TAN

When you drill down further, you can see the configuration behind the item category. You can see that the item category TAN is relevant for pricing as well as billing.

TANN - Free Goods Item Category

If you compare the item category TANN (Free of Charge items), what changes will you expect to see? Yes you will find that it is set for pricing as 100% off. See screenshot below.

Now let us see what the difference would be if you look at TATX item category which refers to Text Item. Text items are meant to be there on documents just for information, printing and labeling.

TATX Item Category Detailed View

You can see that the information is copied to delivery document but has not pricing and has not schedule line items as there is no stock or scheduling associated.

You can create your own Item Category by clicking on create new, or by copying an existing item category.

Few things you need to note here – Your custom item category need to start with Z or Y. Also, when you save item category, you will need to create a transport request.

Step 2 – Assigning the item category determination

Once you have the item category in place, you must tell SAP, which one to determine when you are entering a line item in a specific transaction. You can do the same as the below SPRO path.

Sales and Distribution à Basic Functions à Sales à Sales Document item> Assign Item Categories.

Set up Item Category Determination

As you can see the assignment is based on the parameters we discussed in the pre-requisite section of this article. That is Sales document type, item category group, item usage, item category higher level item, and item category and save the information.

For example, See the above entry which determines the default item category as TAN for all OR (Standard Order document type) and NORM (Normal Items). It may be noted that Item Category comes from Material Master’s Sales Area view. See the material master record for your reference below.

However, from the screenshot, it shows that system will allow you to manually override the item category with TAP, TAQ and TANN if the user wishes so. It may not allow you to enter TAPA for example.

Important transactions and tables related to item category determination

This section helps you to troubleshoot problems as well as a shortcut to access information when you gain more exposure to the topic. Here are the list of tables and transaction codes associated with SAP item category determination.

Important Transaction Codes

SnoTransaction CodeMeaning
1VOV7Maintaining Item Category determination. You can use this to create a new item category
2VOV4Set up Item Category Determination. Based on the settings item category will be determined when you enter the line item in sales document.
3OVAWDefine / View Item Category Group

Important tables related to item categories

SnoSAP TablesMeaning
1TVVWItem Category usage
2TVAPSales Document : Item Categories
3TPTM Item CategoryGroups in Material Master
4T184Sales Documents : Item Category Determination

Usual Item Categories that SAP Consultants come across

We are listing some of the important item categories. You may want to explore their important attributes and how they are different from one another.

SNoItem CategoryDescription
1BVNCash Sales Item
2TACVariant Configuration
4TAMAssembly Item
5TAMADelivery Order Related
6TANStandard Item
7TANCBatch Item Split
8TANNFree of Charge Item
9TAOMilestone Billing
10TAUEmpties (UnLinked)
11TAWValue Item
12TAXNon-Stock Item
13TAZEmpties (Linked)

Troubleshooting Item category determination error

Sometimes you may have problems at the run time either for an item category determination set up by yourself or by someone else. Following is the way you can troubleshoot with the problem.

  1. Find out the combination of Sales document type, Material Item Category Group that the transaction is processing.
  2. Goto table T184 or the SPRO node as discussed in the article.
  3. If the item category you were expecting to determine, maintained here? Please check also the high level item category if maintained in determination.
  4. If the user is manually entering the item category, it should be maintained in one of the Manual Item Categories allowed in that row.

Conclusion and Further Practice

We hope that you now feel more confident in understanding the significance and configuration of the Item Category Determination process. You should also be familiar with the important transaction codes and tables.

Are you ready to take your knowledge to the next level? If so, we have some hands-on exercises listed below that can help you master this subject:

  1. Compare the TAN and TANN item categories and take note of the differences.
  2. Create a new item category, ZTOP, by copying TAN. Set up the determination process so that whenever an order is created with a specific Material Group (let’s say TRPM), ZTOP is determined as the item category.
  3. If you have third-party items in SAP, what would be the key attributes of such an item category?

We would be eager to know how your exercise with Item Category determination went. Please feel free to comment and let us know.

About Us and Why We Blog

We are a highly motivated and dynamic couple, united by a common purpose: to make a positive impact on our community by sharing the power of knowledge.

Throughout our own personal and professional journeys, we were fortunate to have the guidance and support of exceptional mentors who played a pivotal role in shaping us into the individuals we are today.

Now, with the launch of GoUpSkillMeNow, our mission is to empower and inspire others in the same transformative way. We are embarking on an incredible adventure, dedicated to helping individuals unlock their full potential and achieve their career aspirations.

Read our professional journey and our story out here.

Feel free to explore some of our recent SAP blog listed below.


Shilpa is an accomplished leader with 17 years of experience in various facets of IT strategy, program management, continuous improvement, business transformation, and service delivery. Her experience span over industry verticals like Manufacturing, HealthCare, CPG and Media companies. She is fond of organizing events and is also associated with Habitat for Humanity.

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  1. Lenore Farrington August 7, 2023 at 4:19 am - Reply

    I am really pleased to glance at this weblog posts
    which includes plenty of valuable information related to SAP SD, Finance and MM topics.Thanks for providing these kinds of information.

  2. Sheila Howells August 7, 2023 at 4:24 am - Reply

    I am regular visitor, how are you everybody?
    This post posted at this site is in fact good. Nice explanation on Item Categories. It would be great if you can write about Consignment Stocks in SAP.

  3. Clifton Keener August 7, 2023 at 6:15 am - Reply

    Thanks for finally writing about > SAP Item Category determination – Zero to hundred – GoUpSkill Me < Liked it! Also liked the post on Accounting Document not getting posted. It was really vaulable

  4. Zakhurt August 7, 2023 at 8:53 am - Reply

    Finally a nice blog on SAP related topics. Nice explanation in a detailed manner.

  5. Gregory S August 7, 2023 at 4:19 pm - Reply

    I like the valuable SAP information you provide to your articles. Will bookmark your blog and test again right here regularly.

  6. Lonni Land August 8, 2023 at 11:32 am - Reply

    Nice article

  7. Login Angkasa August 11, 2023 at 2:36 pm - Reply

    Everything is very open with a precise explanation of the
    item category set up and determination procedure. It was definitely informative. Your site is extremely helpful.

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  8. Actu Chômage October 5, 2023 at 11:23 am - Reply

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