Organization Structure/Enterprise Structure in
SAP MM
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Organization structure:
Organization structure explains their
structure/Hierarchy of the company they follow to run there business on daily
basis, Every company will follow the same structure up to some level but every
company which are in SAP family then they have 90% same structure and 10% may
differ as per there rules/regulations/standards.
Organization structure contains may levels, where each
level is having their own tasks/rules and no one can by-pass the hierarchy,
because SAP is having those features where we cannot process further even, we
miss one small hierarchy (Assignment).
Every level in the organization structure are inter
linked with one other having relationship like Example below.
A=B=C=D (Just overview) as same as (D=B=A=C) (Just
overview)
Requirement:
Let’s think A company is having ERP tool (Non-SAP) and
thinks that production and sales activities are not as per the standards and
profit centers are not calculating properly which may leading to losses in
sales and business.
Now company would like to move to ERP-SAP, in which
all the things should be correct to maintain the proper daily activities and
even higher management no needs to ask anyone for reports or goods inventory or
sales management details from the departments.
Higher management can see the reports/stocks/profit
centers/sales in the SAP directly, with no support from anyone, and even
employees and customers need to follow the process for sales as well as
production from the organization. There is no such deviation in the company to
flow the profits outside, so many companies are moving to SAP to increase the
standards of there company even SAP is cost effective.
Now SAP consultants will come into picture, where SAP
provides the standard settings to their customers once you buy the ERP-SAP to
your company, now consultants in the company sit with higher management for the
discussion for the flow and the process.
MM/FI/SD/PP will be supporting for functional process
of SAP, ABAP/Basis will be supporting for technical and even we have many but
company follows other modules as per there requirements, whereas mentioned
modules are very important for them to design and make settings properly as per
there company conditions.
Backend Settings:
SPRO- It’s the T-code for backend settings.
SAP reference IMG will take you to the path of the
settings.
Defining Requirements:
As we spoke above enterprise structure contains many
levels and each level will be having their own roles and responsibilities, they
may maintain all these levels as per there business requirements or legal
reasons.
Hierarchy.
1.
Client/Company
2.
Company Code
3.
Plant
4.
Storage Location
5.
Purchase Organization (Will speak in
depth below)
6.
Purchase group
1.
Client/Company (FI Consultant will
define this)
A
client is the highest level in the organization and its independent with having
their own master data and can pull reports of all company codes under that
client.
Whatever Master data maintained in the client level is
valid for all the levels in the organization structure. Under one client we can
have N number of company codes as per there requirements.
2.
Company Code (FI Consultant will
define this)
Company
code is maintained under the client, where company code is an independent
accounting unit in the entire organization structure, where all the profit,
loss and balance sheet accounts has been maintained by the company code.
Eg: let’s think for 1 country = 1
company code
If the client would like to know the
profit loss accounts for one country Eg: India, then they can pull reports
within few minutes you can have the exact data of profit loss balance sheets.
3.
Plant (MM Consultant will define this)
A plant is an organization unit
within the company code, where all the production activities and make finished
goods available in the plant for the sales purpose.
All the logistics will be taken place
in the plant and even warehouse activities will take place. Every material
valuation will take place at plant level only.
4.
Storage location
Storage location is the place where
stock gets separated, where we have many types of stocks in plant and we need
to separate the stocks as per there nature, like raw materials, packaging,
semi-finished goods.
Each material types will take place
one storage location and we can maintain N number of storage locations in one
plant, and main thing is we can stock the physical stock. Material data can be
maintained at storage location level and as well plant level also.
5.
Purchase Organization:
Purchase organization is the part of hierarchy,
where they will be responsible for purchasing activities in the respective
plants or Company.
Here we can assign 1 purchase organization
to 1 company code and needs to assign to all the plants, so that that purchase organization
will be responsible for all the plants in that company code.
Or else, we can assign the purchase organization
to plant and every plant will be having their respective purchase organization,
so that every plant is independent with their own purchase organization
****Purchase organization is
responsible for all the purchasing activities in the respective plant, if we
assign as decentralized-plants wise****
Even we can do like, 1 company will
have 1 purchase organization, where it’s called centralized purchasing.
1.
Centralized purchasing
2.
Company specific
3.
Plant specific- decentralized
Example:
lets think
we have a company IIIM- where its having centers in all the countries like US, UK
,Germany(plants) and some countries, now we have company codes, plants and respective
storage locations, as we have all these we need the production to be taken
place on daily basis and so we need purchase organization to fulfill this
activity, for example we need today some engines and required immediately for
production purpose and 1) If we have centralized purchasing then headquarters
in US company-Purchase department will take up the decision to buy that engine
and 2) if we select company specific then let think each country will have 1
company code and respective department will take up the decision and last one 3)
plant specific- lying in your plant and will provide approvals for purchase.
Cross purchase organization (1
Scenario):
As I told in above scenario, each company
code will be having their own purchasing organization (Company specific), in
this case if suppose you want 1 purchase organization to be responsible to 2
company codes.
Its not possible to link 1 purchase organization
to 2 company codes but we have something like cross purchase organization, its
possible in plant level, where we can link purchase organization to plant with
2 different company codes.
Reference purchase organization:
Reference purchase organization will
come into picture only if your company is using centralized purchasing.
We can create a one referenced purchase
organization, and we can link to company specific purchase organizations, such
that we can use this purchase organization when you will create contract with
different plants with different purchase organizations.
Reference P.Organization-----Contract---different
P.Organizations-Different plants
Example: let’s think we are managing
a company where we have 5 plants with different locations and every time we use
to purchase individually let think monitors we will buy for 10000 and each
plant individually buys for around 9900-10000 as per the purchasing organizations
and markets in the state. Now lets think reference purchasing organization will
come –we have contract with reference purchase organization where will create
only 1 contract with 1 big vendor and maintain all the plants in the contract that
which are belonging to different purchase organizations, will order in bulk for
all the plants whenever its required, so that will get for less price. so that
we can procure that monitors for only 9500-9900(Quantity scaling will come into
picture if we buy more monitors).
Better negotiations will be possible
with reference purchase organizations.
****Behalf of other purchase
organizations referenced purchase organizations will come into picture for all
activities for better production/pricing.
6.
Purchasing group
Purchasing group is an independent
entity, where it explains the responsible buyer/ responsible group of buyers
for those materials.
We can manage this in MM01, there was
no assignment for the purchase group and MM persons will define this purchase group.
Backend settings-Definition and
Assignment
Client
SPRO-Enterprise Structure-Definition-Define
Company-New entries and maintain the client
Mention all the details in client
like address and other things and save.
Company code:
SPRO-Enterprise
Structure-Definition-Edit, Copy, Delete, Check company code-New entries.
Mention all the details and save.
Plant:
SPRO-Enterprise
Structure-Definition-Logistics general-define plant
Maintain all the plant details as
shown in their screen.
Always take copy org from 1000 plant,
which is predefined by SAP.
Storage Location:
SPRO-Enterprise Structure-Definition-materials
management-define storage location
We are maintaining plant while creating
storage location and no need of other linking.
Purchase organization:
SPRO-Enterprise
Structure-Definition-materials management-Define purchase organization
Assignment of
all above Hierarchy:
Plant to
Company code:
SPRO-Enterprise
Structure-Assignment-Logistics General-Assign plant to company code
Purchase organization
to company code:
SPRO-Enterprise
Structure-Assignment-materials management-Assign Purchase organization to
company code
Purchase organization
to plant:
SPRO-Enterprise
Structure-Assignment-materials management-Assign Purchase organization to plant
code
Standard Purchase
organization to plant
SPRO-Enterprise
Structure-Assignment-materials management-Assign standard Purchase organization
to plant code
Note: Next Blog will be Account Determination.
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