Scribd
Upload
289 views4 pages

SAP MM Organization Structure

An enterprise structure in SAP ERP defines organizational levels like client, company code, plant, storage location, and purchasing organization. A purchasing organization is responsible for procurement activities and can be centralized, handling purchasing for all company codes, or decentralized with separate purchasing organizations for each plant.

Uploaded by

gopinath
Copyright
© © All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
Available Formats
Download as DOCX, PDF, TXT or read online on Scribd
289 views4 pages

SAP MM Organization Structure

An enterprise structure in SAP ERP defines organizational levels like client, company code, plant, storage location, and purchasing organization. A purchasing organization is responsible for procurement activities and can be centralized, handling purchasing for all company codes, or decentralized with separate purchasing organizations for each plant.

Uploaded by

gopinath
Copyright
© © All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
Available Formats
Download as DOCX, PDF, TXT or read online on Scribd
You are on page 1/ 4

Every organization has some framework or structure according to which the whole

business runs. An enterprise structure is the structure that represents an enterprise in


the SAP ERP system. It is subdivided into various organizational units which, for legal
reasons or business-related reasons, are grouped together.
An enterprise structure defines various levels in an organization. These levels are
placed according to some hierarchy. Each level has some specific functionality
associated with it, which in a combined way describes the working of an organization.
In addition, an enterprise structure defines various organizational units that are present
in an enterprise. The organizational structure in MM consists of the following
organizational levels −

 Client
 Company Code
 Plant
 Storage Location
 Purchasing Organization
 Purchasing Group
The following diagram depicts one such organizational structure that describes the
levels incorporated in an organization. It puts the client at the topmost, followed by
multiple company code, followed by multiple plants, plants having multiple storage
location with their own or centralized purchasing organizations.

In the following sections, we will look into each of the units that constitute an enterprise
structure.

Client
A client has the following attributes −
 Client is a commercial organizational unit in R/3 system.
 It has its own set of master data with independent table sets.
 According to hierarchy, a client occupies the highest level in a SAP system.
 Data that is maintained at the client level is valid for all organizational levels.

Company Code
A company code has the following attributes −
 Within client, a company code is an independent accounting unit.
 It is a legal entity that has its own profit, loss and balance statement.
 It is the smallest unit in an organization for which a complete independent
account set can be replicated.

Plant
The basic points to be noted about a plant are as follows −
 Plant is an organizational unit within a company where activities take place. A
plant will produce goods and make goods available for the company.
 It is a unit having manufacturing facility, warehouse distribution center, or a
regional sales office within logistic. It subdivides an enterprise in different
aspects.

Storage Location
A storage location has the following attributes −
 Storage location is an organizational unit, which actually differentiates between
different material stocks in a plant.
 Storage location is a place where stock is kept physically.
 A plant can consist of multiple storage locations. All data is stored at storage
location level for a particular storage location.

Purchasing Organization
The points to be noted about a Purchasing Organization are as follows −
 A purchasing organization is an organizational unit under a company or a plant
that is responsible for the procurement activities according to requirements. It is
responsible for external procurement.
 A purchasing organization can be at the client level, which is known as a
centralized purchasing organization.
 A purchasing organization can also be at the company or plant level, which is
known as company-specific or plant-specific purchasing organization.
Different forms of purchasing can be described as follows −
Centralized Purchasing
Purchasing organization is not assigned to any company code. It procures for all
company codes belonging to different client.
Company Specific Purchasing
Purchasing organization is assigned to a company code only. The plant belonging to
the company code can purchase through this purchasing organization.
Plant Specific Purchasing
Purchasing organization is assigned to a plant. Only this specific plant can purchase
through this purchasing organization.

Purchasing Group
The attributes of a purchasing group are as follows −
 Purchasing group is an organizational unit responsible for the everyday
procurement activities within an organization.
 It is a buyer or a group of buyers responsible for the procurement activities in a
purchasing organization.

Purchasing Organization

A purchasing organization is responsible for all purchasing activities


within a company and is responsible for handling procurement
activities and documentation such as RFQ, contracts, purchase orders,
etc. In simple words, a Purchasing Organization is an organizational
unit in SAP Materials Management which is responsible for purchasing
and carries out procurement activities on behalf of the company.

DECENTRALIZED PURCHASING

Suppose a company has several plants and all the plants have their
own procurement department which are responsible to carry out day
to day purchasing for their own respective plant. Hence, Purchasing
Organizations will be created that will be used separately for each
plant. So, this means that a Purchasing Organization can be assigned
to a Plant.
CENTRALIZED PURCHASING

It is also possible to assign one or more plants to a single Purchasing


Organization. If, for example, a company has only one procurement
department which is a centralized and carries out procurement
activities for all the company. Furthermore, a Purchasing
Organization can also be assigned to company code level as well.

Similarly, one plant can have several Purchasing Organizations


assigned to it as well, this varies from company to company, industry
to industry and scenario to scenario.

You might also like