Oracle MultiOrg Concept

Since Oracle EBS or E-Business Suite is a complete automated application and caters the
need of variety of industries. It has an architecture called MultiOrg or Multiple
Organization.
Whenever we talk about an organization irrespective of its multiple structures, we will
find certain common things or feature or let me call it departments. It is not necessary
that every organization has every department. But some departments and/or processes are
more or less the same.
What is an Organization? In EBS it is a vague term, infact, varied term. In Oracle EBS
an organization can be a Legal Entity, or an Inventory, or a department. Anything can be
treated as organization in Oracle. When we go through the Oracle EBS documentation we
will find the excessive use word Organization. But it not the organization we refer it to
here in daily routine.
In our daily routine if we say the word organization, we will certainly be referring to
some company, for example, Inbox Business Technologies, IBM, Acer, HP, these are the
example of organization selling hardware. But in Oracle Multi Org structure they are
referred to as Legal Entities.
The Multi Org structure in Oracle consists of following organizations
1.
2.
3.
4.
5.

Business Group or HR Business Group

Ledger
Legal Entity or GRE
Operating Unit
Inventory Organization

BUSINESS GROUP (BG)

A business group is the top level in multi org structure. Oracle view human resource as
the basis for the business. A human resource is selling the products that organization is
manufacturing, a human resource is purchasing raw materials required to make a product,
a human resource is making accounting and financials statement. In short a legal entity
transacts because of Human Resources.
In Oracle EBS, Business Group holds the employee information. If there is a Group of
Companies and they all are using a single instance of Oracle Apps then every employee
in each company will be defined at BG level. Each employee will then be assigned a
responsibility. That responsibility determines which company that employee belongs to
and what type of transaction can be carried out. When a fresh EBS instance is installed it
has a Default Business Group namely Setup Business Group. We usually rename it as
per our requirement.

A BG can have multiple ledger attached to it and there can be Multiple Business
Groups in one instance.
Oracle HR resides at this level of MultiOrg structure.
LEDGER
Formerly called Set of Book in R11. Ledger is an accounting book.
Take an example of a utility shop with an old man sitting with a big register. In that
register he notes every transaction related to money or finances. Lets say he sells some
bottles of mineral water to a person. He notes the Date on the transaction took place, the
Amount involved in that transaction, Persons name, particulars of goods sold to that
person.
This is similar to what we do in a ledger. There are 4Cs concepts in Ledger.
1.
2.
3.
4.

Chart of Account (Particulars of Goods)

Currency (Amount)
Calendar (Date)
Subledger Accounting Convention (Cash / Accrual)

Oracle General Ledger resides at this level.

LEGAL ENTITY
Legal Entity definition by book is any company which is reporting to Government, an
entity which exists. In Oracle EBS a company is also referred to as GRE Government
Reporting Entity. A legal entity has a disclosure requirement of their annual revenue. An
organization which prepares its Balance Sheet and Income Statement.
Oracle says anything can be your legal entity. Your manufacturing plant can be y.our
legal entity, your departments can be your legal entity. Your inventory can be your legal
entity. A legal entity is the one for which you want a Balance Sheet and Income
statement. How can a balance sheet be generated for a department is another topic?
OPERATING UNIT
Operating Unit (OU) comes under a ledger with a legal context. Legal Context is
referred to as the Legal entity to which it is attached. The purpose of an operating unit is
to segregate or separate subledger transactions. A legal entity having different branches in
Pakistan can treat each branch an operating unit.
Oracle Payables, Purchasing, Receivables, Order Management resides at this level of
MultiOrg.

In general an operating unit is the one dealing with paper work. How?
Take an example of P2P (Procure to Pay) cycle. It involves Purchasing and Payables.
From Purchasing you generated an RFQ (Request for Quotation) and send it to vendor,
against the RFQ you receive a Quotation. Against that quotation you send the PO
(Purchase Order), Against that PO you receive Goods and GRN (Goods Received
Note), against that GRN you receive payables Invoice, against that invoice you make
Payment. Each of these documents are from Oracle Purchasing and Payables.
Similarly there is a O2C (Order to Cash) cycle.
INVENTORY ORGANIZATION
Inventory Organization is last or the lowest level of MultiOrg structure. Inventory
organization refers to any kind storage of item, finished goods and raw materials, etc.
This storage can be Warehouse, Floors, Cabinets, Drawers, or a logical store which dont
exists physically.
Inventory in general refers to storage and movement of goods from one Inventory
organization to another. Inventory has two types of inventory: Master Item Inventory
Org, Inventory Organization and Sub-Inventory Org.
Master item inventory stores the every information of item or the definition of item. It
does not store the information of location that item is placed or the quantity of item
available. Inventory Organization is same as the Master but it has the costing definition,
locator information, and types of item it can store. Each Inventory organization should
have at least one Sub Inventory Organization. There can be multiple sub inventories
under one Inventory Organization. Costing method can also be defined at sub inventory
level.
Oracle Inventory, Manufacturing,
Management resides at this level.

Warehouse

Management,

Enterprise

Asset