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for example. • From a business viewpoint. • Specifications or data that you make and enter at this level apply to all other organizational units below it. the user specifies the client in which he or she wishes to work. Usually there is a 1:1 relationship between the controlling area and the company code. one controlling area can handle cost accounting for several company codes in one enterprise. and in terms of data. • A user master record must be created for every user in the client in which he or she wishes to work. . In this way. Organizational Units Company code • A company code is the smallest organizational unit of external accounting for which a complete. For the purpose of company-wide cost accounting. with separate master records and an independent set of tables. self−contained bookkeeping system can be in place. Controlling Area The Controlling Area is the business unit where Cost Accounting is carried out. • Access authorization is assigned on a client−specific basis. a company within a corporate group (client).Client • The client is a unit within an SAP ERP system that is self−contained both in legal and organizational terms. • This includes the entry of all events that require posting to the accounts and the creation of a complete audit trail for balance sheets and profit−and−loss statements. the client represents a corporate group. • A company code represents an independent unit producing its own balance sheet. • The client key is uniquely defined in the system and is a three−digit number. • The client is the highest hierarchical level in the SAP ERP system.

procurement. • A company can have one or more purchasing organizations. discount. . • A Purchasing Organization is represented by a client-unique 4-digit alpha-numeric. Purchasing Organization • It’s an organization unit that has responsibility to company’s purchasing requirements. • It negotiates purchasing conditions (price. and other things) with vendors. Organizational Units Storage Location • A Storage Location is a storage area comprising warehouses in close proximity. and materials planning. Plant • The plant is an organizational unit within logistics that subdivides an enterprise from the viewpoints of production. • A company code is defined in the system by means of a four-character alphanumeric key that is unique in the client. • Material stocks can be differentiated within one plant according to storage location (inventory management).• You can set up several company codes in one client/controlling area in order to keep separate sets of financial books. • A Storage Location is represented by a unique 4-digit alpha-numeric for a specific plant.

• Documents created throughout the Sales and Distribution process like order. • A sales organization is uniquely assigned to a company code. and billing document will belong to a sales organization. national. or international subdivision of a marketplace in which products are sold. delivery. Sales Organization Organization Units : . • The sales organization is the highest summation level in sales statistics.Sales Organization Sales Organization • Similar to the purchasing side of an organization. the group responsible for sales has additional unique business requirements. • The sales organization can be used to represent a regional. however a company code may have more than one sales organization assigned to it. • The sales organization is responsible for selling and distributing goods and services.

this can be done by creating a specific scope of planning and is maintained in the MRP view of the material master . purchase orders. The results of the MRP run are recommendations that fulfill gross requirements by taking into consideration the existing stock levels and existing purchase and production orders. Basically. The MRP area is an organizational unit for which material requirements planning can be carried out. production orders and forecasts to create material ordering recommendations to fulfill the company’s commitments to its customers. MRP area by default will .Division Sales Area Sales Organizations and Plants MRP and MRP Area • • • • • Material Requirements Planning (MRP) The MRP considers existing stock. sales orders. there are three types of MRP area: – Plant MRP Area – MRP Areas for Storage Locations – MRP Areas for Subcontractors During material creation if you do not enter the MRP area.

Task lists/routings. Material master etc.Be Plant MRP area During the process of modeling actual business on SAP ERP software environment will essentially have three types of data ¾ Configuration data ¾ Master data ¾ Transactional data Configuration will be the foundation upon which most master data will be built.g. Master data of a particular object does not change all the time E. Work centers.g. Transaction data is your day to day varying data E. Cost centers. Details about finance transactions with a customer or supplier .

or a raw material (purchased part). together with the quantity and unit of measure. • The material master record integrates data from different areas of a company • For the company.Material Master Material Masters • The material master contains information on the materials that a company constructs. formally structured list of the components that make up a product or assembly. and product costing. These BOMs are used in material requirements planning. manufactures. Bills of material will be integrated with the material master and can be used in conjunction with routing to schedule a more precise usage point. Plant engineering and construction (A) Chemical industry (C) Mechanical engineering (M) Pharmaceuticals (P) Bill of material • • • • • • • A bill of material (BOM) is a complete. procurement. . a semi−finished product (subassembly). production. The header and components all contain validity dates that can be affected using Engineering Change Management. • ƒ ƒ ƒ ƒ Material master record is required to classify according to industry sector like. A BOM consists of header material and BOM items (components). Bills of material can exist at the plant and/or client level. and sells. The list contains a description and object number for each component. stores. • The material type can be a finished product (product or article). the material master record represents the central source for data on materials. The information is stored in a database that is a central source of data on materials. procures.

a BOM can also contain documents or text items. A BOM item can also contain components. work centers are also called machine centers or capacity centers. which flow into the finished product. or assemblies of the assemblies (and so on). The planned time for each operation is stored in the routing as standard values. In different companies. BOMs are single level. BOM items indicate individual parts and assemblies. assemblies. which are identified by their material numbers. so that multi−level production can be described by the single−level BOMs from the finished product. These standard values are the basis for: – – – – Where the work is to be done How long the work should take What materials are needed for each operation What tools and fixtures are required Exercise . In addition to stock items.• • • • The base quantity in the header material specifies the finished production quantity on which the component quantities are based. Routing • A Routing shows operations in a sequence and acts as a template for production orders. Work center • A Work center is a location that defines where production activities take place according to order requirements.