That SAP Business ByDesign Business case product definition enables you to specify a product sold to a customer and manufacture it exactly according to this specification. The scenario is particularly relevant for companies that offer products in many variants or manufacture specific products according to detailed customer requirements. You can define and reuse possible product variants using product features, product models and product specifications.

• Product features describe the properties of a product.
• Product models describe the possible variations of a product.
• Product specifications describe individual customer requirements or product variants. You can either create product specifications in SAP Business ByDesign or import them from an external system.

With the “Product Definition” business scenario, you can optimize the product portfolio and production, meet customer requirements for the product, and reduce the administrative burden of product master data.

With the business process Define Product Characteristics and Product Models, you can define product characteristics and product models in order to structure your product master data and thus reduce the effort for product master maintenance. Product characteristics describe possible properties of a product, including format (for example the unit of measure) and value range. A product model describes all possible variations of a product by combining features, attachments and / or free text notes. You can restrict the allowed values for the characteristics, define a standard value or create new characteristics in the product model. You can assign one or more products to a product model. The product model can then be used to specify these products, which is particularly important in the sales process.

You can use the Specify Product Variants business process to create a product specification that consists of documents with which a particular product is specified in more detail than in the product master. These specific details usually take customer requirements into account and can be documented in the form of attachments, free text (notes) and / or assessed characteristics.
If the product already has a model, evaluate the required characteristics defined in the model. The attachments and notes belonging to the model are automatically included in the product specification. You can change these attachments and notes.
You can also create a product specification directly from a sales order.
If a product specification is contained in a released sales order, it can be referenced in all subsequent supply chain processes.

Source: help.sap.com, as of March 2017