SAP MM: Organization Structure

Organization Structure - Definition of Organizational Elements

CLIENT-

The Client is a commercial, organizational unit within the R/3 system, with its own data, master records and set of tables.

Features & Properties-

From a business perspective, the Client forms a corporate group
Client is the highest hierarchical level in SAP system
Client represents a corporate group in SAP Enterprise structure
Client is identified in the system by 3- digit numeric code
Data maintained at Client level is valid across all other organizational levels

In general, Client set up is done by BASIS team.

COMPANY CODE-

The company code is the smallest organizational unit in external accounting for which a complete, self-contained bookkeeping system can be replicated. This includes the recording of all accounting-relevant events and the production of all legally required final statements of accounts, such as balance sheets and profit and loss (P&L) statements.

Features-

Company code is smallest organisational unit within the client

Producing its own balance sheets and Profit/loss statements

Several company codes can be set up within the client

Company code is defined as 4-digit Alpha numeric key ( e.g. SAP1)

Among other things, the following are specified for each company code-

The company address

The chart of accounts (list of G/L accounts)

The local currency (the currency used in a company code in which the local books are kept, usually the national currency)

The fiscal year variant (specification of the periods and special periods of a fiscal year)

The controlling area

Whether balance sheets are also to be produced at business area level

In general practice, Company Code is created by FICO consultant.

CONTROLLING AREA-

The controlling area is an organizational unit within an enterprise for which complete, self-contained cost accounting can be carried out. A controlling area can cover one or more company codes. The associated company codes must all use the same operative chart of accounts.

Just mentioned here for a brief introduction, it's basically handled by FICO consultant.

PLANT-

The plant is an organizational unit within logistics that subdivides the enterprise for the purposes of production, procurement, maintenance, and materials planning. In a plant, materials are produced and/or goods and services made ...

available.

The plant is an operational unit or branch in a company with the following characteristics-

Just one business area is assigned to a plant and a division.

A plant can be assigned to several sales organization/distribution channel combinations.

A plant can have several shipping points. A shipping point can be assigned to several plants.

A plant has an address and a language, and belongs to a country.

A plant has its own material master data. In particular, you can maintain data at plant level for the following views of the material master record: MRP, Purchasing, Storage, Work Scheduling, Production Resources/Tools, Forecast, Quality Management, Sales and Distribution, Costing.

In general, production planning and production are carried out on a plant-specific basis. However, certain applications can work on a cross-plant basis.

Requirements planning and forecasting can also be carried out for MRP areas.

For capacity planning purposes, you can also define pooled capacities.

Product costing can also be carried out on a cross-plant basis.

A plant can also be defined as a maintenance planning plant. A plant can simultaneously be a production plant and a maintenance planning plant.

Plant is created by SAP-MM consultant.

STORAGE LOCATION-

An organizational unit allowing the differentiation of material stocks within a plant. All data referring to a particular storage location is stored at storage location level. This applies mainly to storage location stocks.

Features-

Storage Location is the lowest organizational level in MM and it helps to differentiate the stocks

The storage location is the level at which the stocks of the materials of a plant are physically managed

Inventory management is carried out on quantity basis at this level

Physical Inventory takes place at storage location level

The stocks are managed at storage location level on a quantity basis only, not on a value basis

A storage location is always defined as belonging to a certain plant

A storage location can have different addresses (e.g.- for the delivery of general cargo and bulk material)

It is defined as 4 digit alpha numeric key in the SAP system (e.g.- SL01)

The storage location key only has to be unique within a plant. That is to say, you can use the same storage location keys in each plant. You can thus define the storage location key according to the function of the storage location and set up a uniform storage location structure for all plants.

You can maintain one or more addresses for each storage location. These can differ from the plant address. If you maintain a storage location address and specify this storage location in a purchase order, the associated address will be outputted as the delivery address.

Storage Location is created by SAP-MM consultant.

PURCHASING ORGANIZATION-

A purchasing organization is an organizational unit within logistics that subdivides an enterprise according to the requirements of purchasing. A purchasing organization procures materials or services, negotiates conditions of purchase with vendors, and assumes responsibility for such business.

Features-

Purchasing organization procures materials and services based on the requirements

Purchasing organization negotiates terms and conditions with the vendor

Purchasing responsibility is on the head of purchasing organization

It is defined as 4 digit Alpha Numeric key in the system

You specify the form of procurement by assigning purchasing organizations to company codes and plants. There are the following forms of procurement-

Corporate-group-wide- A purchasing organization procures for all the company codes of a client

Company-specific- A purchasing organization procures for just one company code

Plant-specific- A purchasing organization procures for one plant

There can also be mixed forms.

When organizing your purchasing function, you should take not only responsibilities into account, but also the necessary data maintenance-

Each purchasing organization has (in the standard SAP System) its own info records and conditions for price determination

Each purchasing organization has its own vendor master data (only Purchasing data and partner roles)

Each purchasing organization evaluates its vendors separately with MM Vendor Evaluation

Authorizations for the processing of the relevant purchase transactions can be granted for each purchasing organization

All the items of a purchasing document, such as an RFQ, a PO, a contract, or a scheduling agreement, are assigned to the same purchasing organization

The purchasing organization is the highest summation level for purchasing statistics after the organizational level Client

The purchasing organization serves as a selection criterion for lists of all purchasing documents

The purchasing organization is functionally responsible for purchase transactions and the negotiation of conditions of purchase. A purchasing organization can be assigned to a company code. In addition, it must be assigned to all plants for which it is to be active. Once you have assigned the purchasing organization to a company code, you can assign it only to the plants of this company code. Therefore, as a rule, the central purchasing department (as the purchasing organization) of a corporate group is not assigned to a company code. In the standard system, all the conditions that exist in the system are entered with reference to a purchasing organization (for example, info records).

Purchasing Organization is craeted by SAP-MM consultant.

PURCHASING GROUP-

A Purchasing Group is the key for a buyer or group of buyers responsible for certain purchasing activities.

The purchasers perform the activities of the purchasing organizations. A key - the Purchasing Group - is assigned to every purchaser or every group of purchasers. The purchaser group is internally responsible for the procurement of a material or a class of materials, and externally it usually supplies the contact person for vendors. However, a purchasing group is assigned neither to a purchasing organization nor a plant. A purchasing group can thus be active for all purchasing organizations and all plants if no restrictions have been imposed through authorization management.

Features-

Purchasing group is nothing but a Buyer or Purchaser

Responsible for certain type of material or service procurement

Deals with the vendor by monitoring the purchasing activities

It is defined as 3 - digit alpha numeric key in the system

Purchasing Group is created by SAP-MM consultant.

REFERENCE PURCHASING ORGANIZATION-

You can use a reference purchasing organization to facilitate cross-purchasing-organization procurement transactions. You can thus agree on more advantageous conditions, and use centrally agreed contracts based on larger purchase quantities, or you can simplify condition maintenance. It is possible for other purchasing organizations to use the conditions of a reference purchasing organization for price determination purposes. Similarly, it is also possible for several purchasing organizations to be allowed access to the contracts of a certain reference purchasing organization. In addition to the reference relationship itself, you can also specify in Customizing which of this data (contracts and conditions) a purchasing organization can access. A multilevel reference relationship is not possible. Because the reference purchasing organization is treated as a normal purchasing organization, the vendor master record for the procurement processes must also be maintained for the reference purchasing organization.

STANDARD PURCHASING ORGANIZATION-

If several purchasing organizations procure for a certain plant, you can designate one of them as the standard purchasing organization for the transactions pipeline procurement, consignment, and stock transfer. In the source determination process for stock transfers and consignment, the system then automatically pulls this standard purchasing organization. In the case of goods issues of consignment and pipeline materials, the purchasing info records of the standard purchasing organization are read. These purchasing info records of the standard purchasing organization are likewise applied to valuate the receipt when a PO is automatically created through a goods receipt posting.