Organizational Structure

H-pack Packaging Industries LLC

BUSINESS BLUEPRINT DOCUMENT

Financial Accounting

Organizational Structure

Project: Hotpack Revolution

H-pack Packaging Industries LLC

Version: 1.0

Date: 01 November 2018

HP Revolution
Hotpack-SAP S/4 HANA Implementation Project
BBP_HP_FICO_ORG.docx
Page 1 of 16
 Organizational Structure

Document Information

FICO-ORG

Document Name Business Blue Print

Title Business BluePrint_FICO-ORG.docx

Document Purpose Organizational Structure

Document Status

Contact for Enquiries Manesh M S

Release Description Created by Date Approved by Date

Organizational Jenson T V /
V1.0 Structure Mahesh Ravindran
01 Nov 2018 Manesh M S 15 Nov 2018

INDEX
HP Revolution
Hotpack-SAP S/4 HANA Implementation Project
BBP_HP_FICO_ORG.docx
Page 2 of 16
 Organizational Structure

Contents
1 General information about the scenario .................................................................................... 5
1.1 Background ............................................................................................................................ 5

1.2 Enterprise Resource Planning Objectives ............................................................................. 5

2 General Requirements / Expectations ....................................................................................... 6

3 Process Flow Charts .................................................................................................................... 6

4 Organizational Consideration ..................................................................................................... 6

4.1 Organization Structure ........................................................................................................... 6

4.1.1 Client ............................................................................................................................... 7

4.1.2 Company ......................................................................................................................... 8

4.1.3 Company Code ................................................................................................................ 8

4.1.4 Credit Control Area ......................................................................................................... 8

4.1.5 Chart of Accounts ............................................................................................................ 9

4.1.6 Controlling Area .............................................................................................................. 9

4.1.7 Business area .................................................................................................................. 9

4.1.8 Functional area ............................................................................................................. 10

4.2 Basic Settings for Organisation Structure ............................................................................ 10

4.3 Currency .............................................................................................................................. 11

4.4 Fiscal year and accounting period ....................................................................................... 11

4.5 Posting period variant .......................................................................................................... 11

4.6 Document Types .................................................................................................................. 12

4.7 Posting Key .......................................................................................................................... 13

4.8 Field Status Group ............................................................................................................... 14

5 Solutions in SAP ........................................................................................................................ 14

6 Process Linkages/Integration points ....................................................................................... 14

7 Functional Deficits ..................................................................................................................... 15

HP Revolution
Hotpack-SAP S/4 HANA Implementation Project
BBP_HP_FICO_ORG.docx
Page 3 of 16
 Organizational Structure

8 Approaches to Cover Functional Deficits ............................................................................... 15

9 Business process Improvements/Benefits ............................................................................. 15

10 Authorization and Roles ............................................................................................................ 15

11 Reports and Forms .................................................................................................................... 15

12 Interface/Developments ............................................................................................................. 15

13 Conversions ............................................................................................................................... 15

14 Signoff ......................................................................................................................................... 15

HP Revolution
Hotpack-SAP S/4 HANA Implementation Project
BBP_HP_FICO_ORG.docx
Page 4 of 16
 Organizational Structure

1 General information about the scenario

This document defines an overall framework of a project to implement SAP for H-pack packaging
industries LLC. It highlights business objectives and benefits expected to be achieved with this
implementation. This document covers all major business processes as described in the scope
document awarded for implementation.

1.1 Background
H-pack packaging industries LLC undertakes trading, manufacturing, marketing and distribution of
different varieties of food packaging materials and related products. They manufacture high quality
disposable packaging materials and related materials, paper and protection and hygiene products
through its different manufacturing facilities in UK. Managed by a team of highly qualified and
experienced professionals, it has adopted policies for developing and enriching the potential of each
of its employees who serves the business. With a view to further expand operations and also to adopt
world class business practices, the management has decided to implement S/4 HANA ERP product
from SAP and they would like to derive the maximum benefits out of it.

H-pack plans to implement the following modules available in SAP S/4 HANA ERP:-

FI Financial Accounting
CO Controlling
SD Sales and Distribution
PP Production Planning & Controlling
MM Materials Management
HR Human Resources

1.2 Enterprise Resource Planning Objectives

Objectives:-

 To implement SAP S/4 HANA standard business processes, adhere to business basics and use
SAP as a model for best business practices.
 Integrate business processes and functions across the organization.
 Improve H-pack’s capacity to close its books quickly at the month end on a global and
consolidated basis.

HP Revolution
Hotpack-SAP S/4 HANA Implementation Project
BBP_HP_FICO_ORG.docx
Page 5 of 16
 Organizational Structure

2 General Requirements / Expectations

The organization structure business blue print document covers organization structure of following
entities to be mapped in SAP.
 H-pack packaging industries LLC (Herein after collectively referred as H-pack)
It covers the business requirements gathered during the business requirement study phase and
how the organization elements such as Company Code, Controlling area, cost centres, profit
Centres etc. will be structured to meet the reporting and process requirements.
 Legal reporting requirements such as financials for a fiscal year (From January – December)
 Taxation such as VAT
 Credit management
 Visibility and control of costs, revenues and measurement of profitability across operations
 Planning at each Product segment level (Profit centre), overhead costs at department level (Cost
Centre) with actual data captured against the plan.
 Financial reports based on plant level (single and multiple) and company level

3 Process Flow Charts

N.A

4 Organizational Consideration

4.1 Organization Structure

In an SAP system, a user can use several structures to represent organizational structure of an entity
from the point of view of financial accounting, controlling, materials management, and sales and
distribution. The organizational structures form a framework in which all business transactions can be
processed. An organizational structure consists of several organizational levels, which are used by
different functional groups within an organization. The organizational levels relevant to Finance (FI)
are given below:-

HP Revolution
Hotpack-SAP S/4 HANA Implementation Project
BBP_HP_FICO_ORG.docx
Page 6 of 16
 Organizational Structure

4.1.1 Client
The client is the highest hierarchical level in the SAP system. Specifications that you have to make or
data that you enter at this level are valid for all company codes and for all other organizational

HP Revolution
Hotpack-SAP S/4 HANA Implementation Project
BBP_HP_FICO_ORG.docx
Page 7 of 16
 Organizational Structure

structures, such as sales organization and purchase organization. Consequently, these specifications
are to be entered only once. Central maintenance ensures standardized data. For example, Customer
addresses are stored at client level so that all company codes can access this central data. Different
functional areas also use this data like the customer’s address used for sending out an order
confirmation as well as for printing a dunning notice (reminder letter). Each client is a self-contained
unit with separate master records and a complete set of tables. A client key is used in all master
records, which ensures that they are stored per client. Each user must specify a client key when he or
she logs on to the system. By doing this, the user specifies the client in which he or she wishes to
work. All entries are stored per client. Data processing and analysis are carried out per client. For
example, it is not possible to produce a report on customer Accounts from different clients in one
dunning notice run. Access authorization is assigned per client. A user master record must be created
for each user in the client where he or she wishes to work.

4.1.2 Company
A company is an organizational unit in accounting which represents a business organization
according to the requirements of commercial law in a particular country. You store basic data for each
company in company definition. You only specify particular functions when you customize in Financial
Accounting. Here company Hotpack Holdings and Investments (HPHI) has been mapped as
company.

4.1.3 Company Code

Each company code represents an independent accounting unit. The balance sheet and the profit and
loss statement, which are required by law, are prepared at financial entities level. Further, there is a
business requirement to have a complete balance sheet and the profit and loss statement at
Company code level and Plant level since each plant is a separate legal entity. Hence, H-pack UK
(HPUK) has been mapped as company code under company HPHI. All manufacturing, trading and
logistics entities under HPUK Company code will be configured as plants.

4.1.4 Credit Control Area

The credit control area is an organizational unit that specifies and checks a credit limit for customers.
A credit control area can include one or more company codes. It is not possible to assign a company
code to more than one credit control area. Within a credit control area, the credit limits must be
specified in the same currency. HPCA has been mapped as credit control area for HPHI, for their
future use. It is going to be a joint activity between SD and FI module.

HP Revolution
Hotpack-SAP S/4 HANA Implementation Project
BBP_HP_FICO_ORG.docx
Page 8 of 16
 Organizational Structure

4.1.5 Chart of Accounts

In the chart of accounts list, you enter the GL Accounts that you want to use in your organization.
Chart of Accounts would contain Account Group (e.g. Assets – Fixed and Current, Liabilities – Fixed
and Current, Expenses – Manufacturing, Selling and Administrative, Revenues – Sales and Misc.)
Account group is to ensure that the GL accounts are correctly created as per the numbering
codification given also to ensure that accounts of similar nature are classified properly. For each
company code, you need to specify which chart of accounts is to be used. Several company codes
can use the same chart of accounts which will facilitate group consolidation at a company level much
easier. For H-pack, chart of account HP00 has been planned to be used for company code HPUK.
Since H-pack do not have any plans as of now to used parallel accounting, leading ledger 0L will be
created and assigned to these company codes.

4.1.6 Controlling Area

An organizational unit within a company, used to represent a closed system for cost accounting
purposes. A controlling area may include single or multiple company codes that may use different
currencies. These company codes must use the same operative chart of accounts.
All internal allocations refer exclusively to objects in the same controlling area. Controlling area HPCA
is planned to be configured for company code HPUK .The currency is GBP, the currency type is 20
(Controlling area currency), and the chart of accounts is HP00. The variance indicators (price
differences can be determined for specific transactions) and company code validation (postings to
cost centres or orders only possible within the same company code) are set for the controlling area.

4.1.7 Business area

Business areas are used in external segment reporting (over and above company codes), based on
the significant areas of operation of a company (for example, product lines, branches). If business
areas are maintained, transaction figures for the G/L accounts are managed separately for internal
evaluation purposes and hence it facilitates creation of financial statements for business areas. In H-
pack, although this requirement has not surfaced during BBP discussions, this has to be enabled
considering future needs where a profitability statement needs to be taken plant wise or branch wise.
Therefore, it is recommended to create business areas representing all plants/branches and business
area is made mandatory in all transaction screens by enabling it through the field status group
settings. Since business area to represent a plant or a branch, codes used for plants can be used for
business area as well.

HP Revolution
Hotpack-SAP S/4 HANA Implementation Project
BBP_HP_FICO_ORG.docx
Page 9 of 16
 Organizational Structure

4.1.8 Functional area

A functional area is an account assignment characteristic that sorts operating expenses according to
functions. Examples could be production, administration, sales, research and development etc. This is
useful to segregate the costs when cost of sales accounting is activated. Cost of sales accounting is
another method of looking at the P&L of an organisation. It compares the sales revenue for an
accounting period with the manufacturing costs of the activity. The expenses are allocated to the
commercial functional areas (manufacturing, sales and distribution, administration, and so on).
Expenses and revenues that cannot be assigned to the functional areas are reported in further profit
and loss items, sorted according to expense and revenue type.
With this type of grouping, cost of sales accounting identifies where costs originate in a company. It
therefore portrays the commercial purpose of the expense. It will be useful for H-pack to activate the
cost of sale accounting for company code HPUK and hence the following functional areas are
recommended for creation:-
Functional Area Description

HP10 Sales revenue

HP15 Sales discounts and allowances

HP20 Production

HP25 Sales and distribution

HP30 Marketing

HP35 Administration

HP75 Other expenses

HP99 Dummy functional area

4.2 Basic Settings for Organisation Structure

The purpose of this document is to configure settings in Financial Accounting. These settings control
the transaction entry and the dependant controls in SAP across all the modules.
Parameter Settings
Posting of transactions in SAP require the following settings:-
 Currency
 Fiscal Year in which the transaction is to be posted
 Fiscal year variant for determining the posting periods
 Document Types
 Document Numbering
 Document Posting Keys (debit/credit)
 Posting Period Variant to determine the open and close periods

HP Revolution
Hotpack-SAP S/4 HANA Implementation Project
BBP_HP_FICO_ORG.docx
Page 10 of 16
 Organizational Structure

 Field Status Variant

4.3 Currency
For each company code a currency must be specified. Accounts are managed in the company code
currency. All other currencies are indicated as foreign. The system converts the amounts posted in a
foreign currency into this currency. The currency defined in the company code is known as the local
currency within SAP.
For H-pack, company code HPUK will use GBP as the local currency. For company HPHI, the
currency to be used will be AED and this will be currency to be used for group consolidation
purposes.

4.4 Fiscal year and accounting period

A Fiscal Year is generally a period of 12 months for which the company produces financial statements
and takes inventory. It may or may not correspond to the calendar year. A Fiscal Year variant
specifies the number of periods and special periods in a Fiscal Year and how the system is to
determine the assigned posting periods.
Fiscal year for HPUK is from January to December. The end of a period is the last day of the
calendar month. HPUK will use the Fiscal Year Variant ‘K4’ with 12 normal posting periods and 4
special periods to enable year end adjustment entries.

4.5 Posting period variant

Once a Fiscal Year is defined, it is possible to specify whether a period is allowed for posting or not. In
order to standardize maintenance of accounting period especially across the group, SAP system
allows the specification of ‘open’ or ‘close’ status to be maintained via a posting period variant. For
HPUK, it is proposed that the accountant or finance manager centrally maintains the posting periods.
For each company code a posting period variant should be assigned. Opening or closing of financial
posting periods are controlled through posting period variant. For HPUK, following posting period
variants are recommended:-
Company Code Variant Account Type Description

HPUK HP01 + All Account Types

HP01 A Assets
HP01 D Debtors
HP01 K Creditors
HP01 M Materials
HP01 S GL Accounts

HP Revolution
Hotpack-SAP S/4 HANA Implementation Project
BBP_HP_FICO_ORG.docx
Page 11 of 16
 Organizational Structure

4.6 Document Types

An accounting document type controls the document header and is used to differentiate the business
transactions to be posted, e.g. customer invoice, vendor payments, etc.
 Document types are required in SAP to create and post financial documents (e.g. Bank Payment
Voucher, Receipt Voucher etc.).
 Document types are defined at the client level and are therefore valid for all company codes.
 The standard system is delivered with document types which can be used, changed, or copied.

SAP has defined the standard document types, which will be adopted by H-pack. The document
number range defines the allowable range in which a document number must be positioned and
cannot overlap.
 The document number range has to be defined for the year in which it is used.
 The system stores the last used document number from the number range in the field “current
number” and takes the subsequent number for the next document
Standard SAP allows only a single document number range for each document type at the company
code level.
The following document types will be used:

Document Type Description

AA Asset posting (Acquisition, Transfer, Scrap etc)

AB Accounting document for Clearing

AF Depreciation Postings

CJ Cash Journal

DA Customer Down Payment request, Bank Guarantees

DG Customer credit memo

DR Customer invoice(FI)

DZ Customer payment

KA Vendor Down payment Request, Bank Guarantees

KG Vendor credit memo

KR Vendor invoice(FI)

KZ Vendor payment(Manual)

PR Mat Price Revaluation

RE Invoice – gross(MM)

RV Billing doc. Transfer(SD)

HP Revolution
Hotpack-SAP S/4 HANA Implementation Project
BBP_HP_FICO_ORG.docx
Page 12 of 16
 Organizational Structure

Document Type Description

SA G/L account document(JV)

SB G/L account posting

UE Data Transfer

WA for goods issues, transfer postings, other goods receipts

WE for goods receipts with reference to purchase orders

WI for inventory differences

WL For goods issues for deliveries (Sales and Distribution (SD)

ZA Legacy Asset Posting

4.7 Posting Key

Posting Key controls Debit or Credit account indicator for each line item.
 The posting key also describes the type of transaction that is entered in a line item and allowable
account type, which will be entered for the respective line item.
 SAP provides certain predefined posting keys. These predefined posting keys will be used
wherever applicable.
 For every posting key, properties control the entry of the line item.
 For each Posting Key, a reversal-posting key may be defined. The reversal-posting key is used to
reverse a document posted in financial accounting.
Some of the Posting Keys are:
Account
Posting keys Transaction Debit/Credit Reversal
Types
01 Invoice Dr D 12

02 Reverse credit memo Dr D 11

09 Special G/L debit Dr D 19

11 Credit memo Cr D 02

12 Reverse invoice Cr D 01

19 Special G/L credit Cr D 09

21 Credit memos Dr K 32

29 Special G/L debit Dr K 39

31 Invoice Cr K 22

32 Reverse credit memo Cr K 21

35 Incoming payment Cr K 25

39 Special G/L credit Cr K 29

HP Revolution
Hotpack-SAP S/4 HANA Implementation Project
BBP_HP_FICO_ORG.docx
Page 13 of 16
 Organizational Structure

Account
Posting keys Transaction Debit/Credit Reversal
Types
40 Debit entry Dr S 50

50 Credit entry Cr S 40

70 Debit asset Dr A 75

75 Credit asset Cr A 70

Standard account Types in SAP are as follows:

 S - General Ledger
 A - Assets
 K - Vendors
 D - Customers
 M - Materials
H-pack will use standard posting keys and account types.

4.8 Field Status Group

The field status group is a logical grouping of various field status combinations. The field status
influences the appearance and creation of an account's master data.

Sl.No. Field Status Function

1 Suppressed No Display

2 Display Can be viewed, but not changed (even in change mode)

3 Required Entry is mandatory

4 Optional Entry can be made if required

For example, Cost Centre will be made mandatory for all expense related accounts.
For H-pack, field status variant “HPUK” will be assigned to the company code HPUK

5 Solutions in SAP

N.A

6 Process Linkages/Integration points

Nil

HP Revolution
Hotpack-SAP S/4 HANA Implementation Project
BBP_HP_FICO_ORG.docx
Page 14 of 16
 Organizational Structure

7 Functional Deficits

Nil

8 Approaches to Cover Functional Deficits

Nil

9 Business process Improvements/Benefits

Details improvements have been elaborated in ERP objective and planning phase at point 1 & 2.

10 Authorization and Roles

Not Applicable at ORG structure. This will be considered in other business blueprint documents for FI
module.

11 Reports and Forms

Nil

12 Interface/Developments

Nil

13 Conversions

Nil

14 Signoff

Role Name Signature Date

Core Team Sajad Kottayi

Core Team Akhil C Prasad

SAP Consultant – IVL Mahesh Ravindran

Project Manager- Hotpack Thomas K K

Project Manager-IVL Manesh M S

Head- Project Delivery, IVL Rajesh Thampy

HP Revolution
Hotpack-SAP S/4 HANA Implementation Project
BBP_HP_FICO_ORG.docx
Page 15 of 16
 Organizational Structure

HP Revolution
Hotpack-SAP S/4 HANA Implementation Project
BBP_HP_FICO_ORG.docx
Page 16 of 16