You are on page 1of 10

Concepts Every organization’s Sales is structured in a certain way.

This structure needs to be represented in SAP based on pre-defined organizational elements and combine them in a pre-defined way. This method of representing all the different organizational elements of the company in a structured way is called Enterprise Structure. Organizational elements or Org Units for short are a system representation of an actual company organizational unit. For example, an org unit in real life could be a particular product division , or a Sales Office in Seattle, or a manufacturing plant in Boston or a warehouse in Alabama. The following picture shows how an enterprise structure is created in SAP.

Instead of discussing the text book definitions of these organizational units, let’s take a company in real life and discuss the same. However, please do note the cardinality. For example, a company can be linked to multiple company codes as shown in the beginning of the picture above. Let’s take the example of General Electric Healthcare ( or GE Medicals ) and discuss the enterprise structure in detail. We have taken GE just as an example, and this enterprise structure in no way represents GE’s internal structure. In fact, GE Healthcare does not even use SAP as its ERP. Before discussing the same, let’s look at another pictorial representation of the same picture as above – but with GE’s org units.

Sales Organization Since the company has presence across the US. A company code is an entity that has to report its financials to the government on a timely basis. In SAP parlance. the Western division is responsible for selling goods in the Western states. A more common example could be Retail or Wholesale. credits. For example. GE Medicals is a Company. a distribution channel is the sales channel through which products are distributed. Company Code GE Medicals in the US will be run through a legal entity. The same organization is also responsible for handling returns. Distribution Channel Just as the name speaks. availability of materials etc. it is not just including the US company but the entire world. . Each of them will be represented as a distribution channel. In this case. And when GE Healthcare declares profits in the US. the medical equipment could be sold through the direct channel or through an agency. This company has presence across the world. GE Medicals in the US is being called as a legal entity.Company GE Medicals is the name of the company. In this case. there will be sales organizations across the united states responsible for selling goods. For example an Incorporated entity can be called a company code.

The Menu path is [ SPRO -> IMG > Enterprise Structure ] Definition: . For example all different types of X-Ray machines would fall under the X-Ray division. Warehouse A warehouse is an extension of the storage location. Goods can still be sold without using Warehouse Management. there could be a plant in New Jersey. While a storage location represents a location where goods are stored. For example there could be one in the bay area and another in Los Angeles Sales Group Each sales office contains multiple sales groups who have a fixed set of responsibilities. Sales Office The western division of the company might be having multiple sales offices in california. Sales Organization + Distribution Channel + Division = Sales Area Configuration The configuration for the enterprise structure is very simple. Storage Location Each plant could be associated with multiple storage locations – A place where goods are stored before being sold. Plant A plant is where goods are manufactured. the topography of the storage. Still you would need a plant. It could be based on the products that they sell or the type of sales that they perform or the role they play in the actual sale. Sometimes. distribution channel and division is called the sales area. storage conditions etc. you might not even manufacture anything – Just trade goods. For example. Sales Office A combination of the sales organization. For example.Division Division is purely related to the product/service we are selling. So a plant could be a physical or virtual place where goods are manufactured or stored at a high level. a warehouse goes much further and describes how the goods are sold. Its a grouping of our products. the new jersey plant could have storage locations in Edison and Iselin. For example. but a sales cannot happen without a storage location. a sales group could be responsible for selling consumables used in the X-Ray while the field-apps will be responsible for selling the software used in the machines.

start by defining those in SAP. So it’s always best to copy from 0001. copy. the ones highlighted in red below are absolutely necessary for the functioning of the SAP Sales & Distribution Module. delete. check Sales Organization under the Sales and Distribution section. After you have fully understood the organizational units in the company. The following picture shows the path of the enterprise structure definition in IMG. While creating a new organizational unit is easy. Each company is run in a different way. Since SAP’s enterprise structure is rigid. . Click on Define.The first step before doing the configuration is to assess the requirement as to how the company is organized and how best it can be represented in SAP. organization units are normally copied from 0001 . While the Company and company codes are defined by FICO consultants. Choose the option highlighted below. there are many associated links in the background that are normally not easy to understand. Let’s see an example of how to create a new sales organization. you might have to try different things to fit their organization’s model into SAP’s org structure. In normal practice.

the assignments were also copied. Assignment : After defining the org elements. The menu path is [ SPRO -> IMG -> Enterprise Structure -> Assignment ]. The reason being that when WEST sales organization was copied with reference to the sales organization 0001. Organizational units can be defined in a similar way for the rest of them. Let’s set up a sales area by assigning a distribution channel and division to the sales organization. So to be on the safer side. Select “Set up Sales Area”. if you are trying to create a sales area with the combination of WEST sales organization that you just created along with a distribution channel of 01 and a division of 01. However. Thats it and you are done. we have to assign them to each other to make a meaningful representation of the company’s organizational units. just as an example. its better to copy it and delete all . This is just one of the default assignment – there are many more. you will see an error as shown below.Enter the copy button and choose the “From” and “To” sales organizations. Enter 0001 as the source and target for example is WEST.

Delete Check Distribution Channel] . Delete Check Division] Sales Organization Define the Sales Organization East. Delete. Configuration = [ spro -> IMG -> Enteprise Structure -> Definition -> Logistics General -> Define. Definition Plant Define the plant New Jersey or Arkansas. The exact configuration steps are below. this is how assignments are created. West or South West Configuration = [ spro -> IMG -> Enteprise Structure -> Definition -> Sales & Distribution -> Define. Assignments can be made similarly based on our first illustration to all other organizational units based on your requirements. Copy.Check Sales Organization] Distribution Channel Define the division say Agency or Direct Configuration = [ spro -> IMG -> Enteprise Structure -> Definition -> Logistics General -> Define. Copy. Copy.the necessary assignments rather that start from scratch. Otherwise. Copy. Delete Check Plant ] Division Define A division say X-Ray or CT Configuration = [ spro -> IMG -> Enteprise Structure -> Definition -> Logistics General -> Define.

say – Door1 or Door 2 Configuration = [ spro -> IMG -> Enteprise Structure -> Definition -> Logistics Execution -> Define.Sales Office Define the Sales office . Copy. Delete Check Shipping Point] Sales Group Define the division say Field Applications or Consumables Configuration = [ spro -> IMG -> Enteprise Structure -> Definition -> Logistics General -> Maintain Sales Group] Assignment Plant to Company Code Assign the Plant you have created to the company code 1000. say – Bay Area or Los Angeles Configuration = [ spro -> IMG -> Enteprise Structure -> Definition -> Sales & Distribution -> Maintain Sales Office] Sales Group Define the division say Field Applications or Consumables Configuration = [ spro -> IMG -> Enteprise Structure -> Definition -> Logistics General -> Maintain Sales Group] Storage Location Define the Storage Location say – Edison or Iselin Configuration = [ spro -> IMG -> Enteprise Structure -> Definition ->Materials Management -> Define Storage Location] Warehouse Define the warehouse – Give it any name you like. Delete Check Warehouse Number] Shipping Point Define the Shipping Point . Configuration = [ spro -> IMG -> Enteprise Structure -> Definition -> Logistics Execution-> Define. . Copy.

Sales Organization to Company Code Assign the Sales Organization to the company code 1000 Configuration = [ spro -> IMG -> Enteprise Structure -> Assignment-> Sales & Distribution -> Assign Sales Organization to Company code] Distribution Channel to Sales organization . as usual. we have created a new plant for New Jersey ( NEW6 ) . you get the following error message. but by default it has already been assigned to 0001 company code. You can choose “YES” And then . Since a plant can only be assigned to 1 company code. For example. you cannot assign the plant to a company code of your choice. delete this assignment and create another.Configuration = [ spro -> IMG -> Enteprise Structure -> Assignment-> Logistics General -> Assign Plant to Company Code ] Tip : When you assign the plant to company code ( Since copies were made off of 0001 ). In this case. the system will say that the assignment has already been made with 0001. When you delete an existing assignment. create a new entry to assign the newly created plant to the company code of your choice. This is because of the “Copy” effect.

distribution channel and division Configuration = [ spro -> IMG -> Enteprise Structure -> Assignment-> Sales & Distribution -> Set up Sales Area] Sales Office to Sales Area Assign the Sales Office Created earlier in the definition step to the Sales Area you created in the previous step. Configuration = [ spro -> IMG -> Enteprise Structure -> Assignment-> Sales & Distribution -> Assign Division to Sales Organization] Set up Sales Area Set up Sales area as the combination of Sales Organization. Configuration = [ spro -> IMG -> Enteprise Structure -> Assignment-> Sales & Distribution-> Assign Sales Organization . Configuration = [ spro -> IMG -> Enteprise Structure -> Assignment->Sales & Distribution -> Assign Sales Office to Sales Area] Sales Group to Sales Office Assign the Sales Group to the Sales Office Configuration = [ spro -> IMG -> Enteprise Structure -> Assignment->Sales & Distribution -> Assign Sales Group to the Sales Office] Sales Organization + Distribution Channel to Plant The Sales Organization and Distribution Channel needs to be assigned to Plant.distribution Channel . Configuration = [ spro -> IMG -> Enteprise Structure -> Assignment-> Sales & Distribution -> Assign Distribution Channel to Sales Organization] Division to Sales Organization Assign the division that you have created to the sales organization .Assign the distribution channel you have created to the sales organization you have created in the definition step.Plant] Warehouse Number to Plant / Storage Location Assign the Warehouse Number you have created to the Plant and Storage Location combination .

Configuration = [ spro -> IMG -> Enteprise Structure -> Assignment-> Logistics Execution >Assign Warehouse Number to Plant/Storage location] Shipping Point to Plant Assign the shipping Point to Plant Configuration = [ spro -> IMG -> Enteprise Structure -> Assignment-> Logistics General -> Assign Shipping Point to Plant] .