You definitely don't have to, it depends on what is contained in the list. If you have members repeating, like products in a reason, then yes. Or if you have employees at the lowest level that can move among different departments, then yes. But if the lowest level is unique and will always be unique, then no.
First of all, my fingers got ahead of my brain, "reason" in the previous post should have been region. Secondly, tell me more about the list and how it will be used. The reason I ask, will users be able to add to it (Assign action on a Dashboard) or will it be a straight hierarchy used for reporting? If you will need the Assign function, then yes, it will need to be a numbered list, but if not and it just used for reporting, then no. Again, it all depends on what will be in the list and how it will be used.