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SAP- E

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 What is the Purpose of Business Organization Structure?

Business Organization Structure defines the enterprise organizational structure

using SAP organizational units. Enterprise structure definition is very crucial
from the following points:
1. Process design, Material Planning & Inventory Management
2. Master data design
3. Reporting requirements
4. Legal requirements etc.

Activity Deliverable/Outcome

Define Business Organization Structure  Organizational Structure Definition

Validation of Business Organization  Finalized SAP Enterprise Structure

Structure

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 Key Learning Points
 Understands the SIPS’s current and future growth requirements and
considers the possible impacts of differing geographical locations, market
differences and legal requirements.

 Enterprise standards represent operational decisions that will have an impact

on internal and external reporting. Examples include:
- Charts of Accounts, Numbering systems, Purchasing Group, Excise Group

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 Client

 Highest Hierarchical Level in SAP (e.g. SIPS)

 Can be Used to Differentiate between a Development, Quality Assurance, and
Production System within R/3
 All Areas of an Organization that are to be Integrated into the SAP R/3
Production System should be Included Under one Client
 Common Set of Rules
- Common Tables
- Common Master data
- Common Data Bases
 Standardized Data Across the Client
- a vendor number and name is common across the client
- a customer is common across the client
- a general ledger number and description is common across the client
- a material number and description is common across the client

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 Company Code
 Smallest organizational unit for which a complete self contained set of
accounts ( Balance Sheet & P&L Account ) can be drawn up for external
accounting.
 Bifurcation of common assets (banks, building, machinery) and common
liabilities (loans etc.) across multiple company codes.
 Cost centers can belong to only one company code – Expenses booked in
common cost center need to be apportioned
 It is possible to have a single procurement organization catering to multiple
company codes.

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 Company Code – Contd.

 Inventory storage will have to be for individual company codes. Material

transfer across company code will involve inter company transactions.

 Centralized functions such as bill passing, accounting, employee expenses

will have to identify the company code to which the transaction belongs.

 Vendor payments, settling of balances, account clearing needs to be done

separately for individual company codes.

 Transactions such as transfer of fixed assets will be cross company

transaction in case of multiple company codes.

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 Controlling Area

 An organizational unit within a corporation in which comprehensive

independent management accounting can be performed

 Allows you to group companies from a Cost Accounting View

 Highest Reporting Level under Cost Center Accounting across which

Information can be Shared and Viewed within the Controlling Module

 Interdepartmental Cost Allocations across Companies can be performed if

they are within the Same Controlling Area

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 Profit Center

 Represents a Separate Area of Operations or Responsibility within an

Organization

 Internal Balance Sheet and Profit and Loss Statement can be drawn for
internal reporting purpose using Segment, derived from Profit center

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 SAP Enterprise Structure - FICO

To be presented by Module Team

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 Plant
 Organizational unit for dividing an enterprise according to Project, production,
procurement, maintenance, and materials planning
 Usually a Manufacturing Facility, Project location, Warehouse, or a Location
that Stocks , Manages, and Valuates Inventory
 Links to Production (PP), Materials Management (MM), and Sales and
Distribution (SD), Projects (PS)
 A Plant is assigned to a Company code
 The following points are important design considerations in Plant creation
• Material valuation and managing the stocks
• Material Planning
• Excise registrations & registers
• Authorization control in information sharing / execution of transactions.

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 Organizational Elements – Purchasing organization

 An organizational unit for acquiring goods and services, and negotiating

terms of purchase with suppliers

 Responsible for Procurement for One or More Plants

 The following points to be considered while deciding the purchase

organization
- Reporting requirements
- Authorizations requirements

 There may be one Central purchase organization to represent Central

Procurement Cell (CPC). Each location / sister units will have its own
decentralized purchase organization

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 Purchasing Group and Storage Location

 Purchasing Group
The purchasing group is internally responsible for the procurement of a material
or a class of materials. The principal channel for a company's dealings with its
vendors

 Storage Location
An organizational unit allowing differentiation between the various stocks of a
material in a plant

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 SAP Enterprise Structure – MM (Material Management)

To be presented by Module Team

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 External Organization Units in SD

 Sales Organization :
- It represents a selling unit from the legal perspective. Sales transactions
are always processed within a sales organization. The responsibility of a
sales organization may include legal liability for products and customer
claims.

 Distribution Channel :
- Distribution channels define how the products/services reach the
customers

 Division :
- Divisions represent the product line. Product/Service lines within varied
product families can be assigned, each to a particular division

 Shipping Point:
- Organizational unit in Logistics, which carries out shipping processing.
The shipping point is the part of the company responsible for the type of
shipping, the necessary shipping materials and the means of transport.
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  Sales Office
- A sales office is an organizational unit in sales and distribution which is
responsible for sales within a specific geographical area.

 Sales Group
- Sales groups (for example, each with a sales manager) are subdivisions of
a distribution chain. Sales groups can be used for reporting purposes.

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 SAP Enterprise Structure – SD (Sales & Distribution)

Sales Organization Company Code

SIPS SIPS

Plant
Division Division
Division
SIPS1 , SIPS2
Scrap Supply Erection

Distribution Channel
Distribution
Controlling Area
SIPS
Distribution Channel
Transmission

Distribution Channel
Civil

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 Thank You

–17 © 2015 IBM Corporation