SAP Organizational Structure

Organization Structure
Guest Brand
Agenda
What is the SAP Organizational Hierarchy SAP Data and the Organizational Hierarchy SAP Terminology Organization Hierarchy Example
Organization Structure and Sales

Sales Area Organization Structure and Plants Plant Definition Storage Locations MRP Areas Warehouse Locations Purchasing Organization
SAP AG 2009. All rights reserved. / Page 2
What is the SAP Organizational Hierarchy
SAP Organizational Structure

The SAP hierarchy is the backbone of the SAP system and is used in every transaction and master data element in the SAP system.
The result is that the SAP Organizational Structure provides the translation of the:
Management Structures Markets Operational Environment Geographic Structures Reporting Requirements
What is the SAP Organizational Hierarchy
Is the fundamental data and functional architecture within the SAP system Is comprised of several customizable organizational entities Is central to the operation of the software Encourages common business processes and master data standards Usually difficult to change once established Design should provide flexibility to add new organizational units
Agenda

SAP Data and the Organizational Hierarchy
The foundation for all data within SAP
Org Structure
G/L accounts, Vendors, Customers, Cost Centers, etc.
SAP Client
Master Data
All activities that use or generate data within SAP
Transactions
Agenda

SAP Terminology
Client - The client is the highest level in the SAP System hierarchy. Specifications that you make, or data
that you enter at this level are valid for all company codes and for all other organizational structures. You therefore only need to make these specifications, or enter this data once. This ensures that the data is consistent. Controlling Area - Organizational unit in an organization that represents a closed system used for cost accounting purposes. A controlling area may contain one or more company codes, which can operate in different currencies, if required. Company - The smallest organizational unit for which individual financial statements are created according to the relevant legal requirements. A company can include one or more company codes. Company Code - Smallest organizational unit of external accounting for which a complete, selfcontained set of accounts can be created. This includes the entry of all transactions that must be posted and the creation of all items for legal individual financial statements, such as the balance sheet and the profit and loss statement.
Business Area - A business area is an economic unit within a company designed for internal
management reporting (e.g. balance sheet and profit/loss statements). It is used for additional reporting that subdivides a company code. Similar to Profit Center functionality.
SAP Terminology
Operating Concern - The Operating Concern is the entity that represents the highest reporting level
in Profitability Analysis. An operating concern is an organizational unit in your company in which the product/market structure is defined.
Credit Control Area - Credit Control Area is an internal hierarchy element which is used to address
the processes of Credit Control and Credit Management.
Chart of Accounts - This is a list of all G/L accounts used by one or several company codes
- The operating chart of accounts contains the G/L accounts that you use for posting in your company code during daily activities. Financial Accounting and Controlling both use this chart of accounts.
Operating chart of accounts Group chart of accounts
- The group chart of accounts contains the G/L accounts that are used by the entire
corporate group. This allows the company to provide reports for the entire corporate group.
- The country-specific chart of accounts contains the G/L accounts needed to meet the country's legal requirements. This allows you to provide statements for the country's legal requirements.
Country-specific chart of accounts
SAP Terminology
Profit Center - An entity in Controlling that represents an area of responsibility within a

company. It is typically a business unit which monitors both costs and revenues and which behaves as an independent operating unit for which a separate operating statement can be calculated.
Cost Center - Cost Centers are the smallest area of cost responsibility within a companys
overall organizational structure. The smallest area of responsibility where budget control is required.
Cost Element - Classification of the organization's valuated consumption of production factors

within a controlling area.
Activity Type - A unit in a controlling area that classifies the activities performed in a cost
center.
Fiscal Year - Usually a period of twelve months for which a company regularly creates financial
statements and checks inventories.
Currencies - Legal means of payment in a country.
Organizational Hierarchy Design Options

Instance

Operating Concern

Distribution Channel
Worldwide SAP System Country-Specific SAP System
Global Company Sales Organizations Market Segments
Sales Channel
Client
Plant

Global Company Business Unit

Legal Entity Country Business Unit Business Unit Segment Global Company Holding Company Consolidation Unit Business Unit Country Product Group None Business Unit Country Market Segment Product Line Product Category
Controlling Area

Manufacturing Site Warehouse Distribution Center Cost Center Physical Building Stockroom
Company Code

Global Company Country
Cost Center

Company
Department (Budget Center) Plant Work Station
Storage Location

Credit Control Area

Stock Room Warehouse Plant -Defined
Global Company Country
Business Area

Purchasing Organization

Sales Organization

Company worldwide Company
Business Unit Country Company Code Market Segment
Purchasing Group

Profit Center

Entire Purchasing Org Buyer
Division
Warehouse

Product Line
Storage Type Storage Bin
Business Unit
Agenda

Organization Hierarchy Example
Client Company
Operating Concern
Controlling Area
Controlling Area
Controlling Area
Company Code
Company
Company
Profit Centers
Company Code Company Code Company Code
Profit Centers Cost Centers

Management Reporting Plant Plant
Cost Centers
Management Reporting Business Area Business Area Business Area
Plant
Plant
Sales Area
Sales Area
Sales Area
Agenda

Organizational Structure - SD
SD Organizational Hierarchy
Foundation for transactional execution and reporting from a sales perspective Accommodate sell thru and transactional processes and create common sales reporting
Mandatory Elements:
Sales Organization
A sales org is the highest level of sales reporting within a company code. (ie. Total LLC sales reporting) Each sales org is assigned to one, and only one, company (code).
Distribution Channel

Distribution channels are means through which materials reach the customer. In past SAP offerings was utilized, better handling elsewhere in SAP
Division

A division can be used to segment a business into product lines. In past SAP offerings was utilized, better handling elsewhere in SAP
Agenda

Sales Area
A Sales Area is a unique combination of: Sales Org + Distribution Channel + Division
Rules
A sales area is required in creating a Sales Order or Customer Master Data for sales use. The sales area can be used for pricing and reporting. When receiving orders, best practice is fewer Sales Areas
Proposed: use one Sales Area per Company Code

Sales Office and Sales Groups (optional)
The Sales Area can be subdivided to create sales reporting on different organizational levels.
Sales Office
Can be viewed as a regional or management reporting function. Assigned to sales areas. Sales Group
Geographic group of employees. Assigned to Sales Office.
Agenda

Organization Structure and Plants
Agenda

Plant Definition
A plant is an organizational unit within a company. A plant is a place where valued goods and services are:

Produced Stored Consumed Distributed
A plant

can be used to define a:
Manufacturing facility Warehouse distribution center
Corporate headquarters
Sales office
A plant
is always assigned to a company code
Plant Definition Criteria
Materials
can be valued differently by plant (i.e. Standard cost). Planning activities generally done by plant (MRP, S&OP) Pricing can be varied by plant
SD
availability checking and shipping point designation are generally done at the plant level
Agenda

Storage Locations
Storage Location is the lowest level of inventory management in an SAP system
In the Inventory Management (IM) component, the storage location is defined as the location of physical stock in a plant.
If you are using Inventory Management without Warehouse Management System (WMS), you can assign one or several physical storage locations to each plant
Agenda

MRP Areas
Three types of MRP Areas: Type 01 = for Plant Type 02 = for Storage Locations Type 03 = for Subcontractors You can assign the following to an MRP area: one or more storage locations a subcontractor MRP can be carried out specifically for the determined MRP areas
Agenda

Warehouse Locations
Define individual warehouses (high-rack storage, block storage, picking area, and so on) as storage types within a warehouse complex and group them together under a warehouse number. As a rule, it is not necessary to define several storage locations for a plant since you assign the WMS warehouse number to a storage location from Inventory Management (IM). Define storage bins for each of the storage types. In this way, WMS manages stock information on all materials in the warehouse at storage bin level.
Warehouse Locations
You can also manage stock for several plants in the same warehouse at the same time. In this case, the same warehouse number is assigned to the storage locations for these plants.
Agenda

Purchasing Organization
A Purchasing organization is an organizational unit responsible for procuring materials or services for one or more plants and for negotiating general conditions of purchase with vendors. The purchasing organization assumes legal responsibility for all external purchase transactions. In the SAP system, a plant must be assigned to one or more purchasing organizations. A purchasing organization can (but need not) be assigned to a company code.
Purchasing Organizations
If you do not assign a company code to a purchasing organization, the latter can engage in procurement operations for every company code. A prerequisite for this is that the plant for which procurement is carried out is assigned to the purchasing organization. Centralized purchasing, with just one purchasing organization Distributed purchasing, with a number of different purchasing organizations each responsible for different plants
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Organization Structure

Organization Structure and Sales

SAP AG 2009. All rights reserved. / Page 2

What is the SAP Organizational Hierarchy