SAP Business Solution

Organisation Structure Overview

Organisation Structure Overview

Integrated Business Processes Overview

Procurement
Logistics Planning
Sales Logistics
Production
Finance / Asset Management

Organisational Structure Accounting:

Client

Credit Control Area

BP01

Company Code
BP01

Controlling Area
BP01

Company Code
BP0X

Standard SAP Solution :

1 Client
1 Credit Control Area
2 Company Codes (main & intercompany)
1 Controlling Area

Organizational Elements - Client

Client Characteritics
Highest Hierarchical Level in SAP(e.g. a corporation)
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

Organizational Elements - Client (Cont.)

Client Characteritics
Common Set of Rules

Common Tables

Common Master Files

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

Organizational Units for FI/CO

Financial Accounting (FI)

Company

Chart of Accounts

Company Code

Controlling (CO)

Controlling Area

Profit centers

Cost Centers

Organizational Elements - FI

Company
Represents a legal/tax entity - Where do you legally represent the
financial events of transacting business?
Arms Lenghts Transactions
Level of External Reporting or Legal Sets of Books

Company

Organizational unit for which individual financial statements can be drawn up

according to the relevant commercial law.

A company can consist of one or more company codes.

All company codes within a company must use the same transaction chart of
accounts and the same fiscal year breakdown. The company code
currencies, on the other hand, can be different.

A company has one local currency in which its transaction figures are
recorded.

Chart of Accounts

A classification scheme consisting of a group of general ledger (G/L)

accounts. A chart of accounts provides a framework for the recording of
values, in order to ensure an orderly rendering of accounting data. The
G/L accounts they contain are used by one or more company codes

For each G/L account, the chart of accounts contains the account
number, the account name and other, technical information

A chart of accounts must be assigned to each company code. This

chart of accounts is the operative chart of accounts and is used in both
financial accounting and cost accounting

Company Code

The smallest organizational unit for which a complete selfcontained set of accounts can be drawn up for purposes of
external reporting.

The includes the recording all relevant transactions and

generating all supporting documents required for financial
statements.

Organizational Units for FI/CO

Financial Accounting (FI)

Company

Chart of Accounts

Company Code

Controlling (CO)

Controlling Area

Profit centers

Cost Centers

Controlling Area

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

Profit Center Accounting

Profit centers

Can be used for Segment Reporting in Accordance to

Accounting Standards
Represents a Separate Area of Operations or Responsibility
within an Organization
Could be Shared Across Company Codes or Specific to a Single
Company Code
Balance Sheet and Profit and Loss Statement can be prepared
A profit center is a management-oriented organizational unit
Used for internal controlling purposes

Cost Centre

Organizational unit within a controlling area that represents a

defined location of cost incurrence. The definition can be
based on:
1. Functional requirements
2. Allocation criteria
3. Physical location
4. Responsibility for costs

Defines the smallest area of responsibility within the company

that causes and influences costs; the lowest level to which
you can meaningfully assign direct and indirect costs

Organizational Elements - CO

Linking of FI and CO
The Operating Chart of Accounts Links Financial Accounting(General Ledger)
to Management Accounting in the following way:

A Company Code is Linked to the Operating Chart of Accounts

The Controlling Area is Linked to the Operating Chart of Accounts

A Company Code then can be Linked to any Controlling Area as long as they are both
Linked to the Same Operating Chart of Accounts

Several Companies can be Linked to a Single Controlling Area regardless of

the Companies Functional Currency. AGAIN, THE ONLY REQUIREMENT IS
THAT ALL COMPANIES WITHIN THE CONTROLLING AREA MUST USE
THE SAME OPERATING CHART OF ACCOUNTS.

Organisational Structure Accounting:

Organisational Element
Client

In commercial, organisational and technical terms, a self-contained unit in an R/3 System

with separate master records and its own set of tables. This is the highest organisational
element in SAP system.

Controlling Area

Organisational element in the SAP Management Accounting module which represents the
highest level of managerial responsibility in the company. All Cost Centres and Profit
Centres are linked through a standard hierarchy to this object.

Company Code

The organisational unit of Financial Accounting which represents the legal entity. A
complete self-contained set of accounts can be drawn up for purposes of external
reporting. This includes recording of all relevant transactions and generating all
supporting documents required for financial statements.

Credit Control Area

An organisational unit that represents an area responsible for granting and monitoring
credit. There is a one to one relationship with Company Code. Credit information can be
made available per customer within a credit control area.

Integrated Business Processes Overview Sales

& Distribution

Procurement
Logistics Planning
Sales Logistics
Production
Finance / Asset Management

Organisational Structure - Sales & Distribution:

Company Code
BP01

Distribution
Channel
03 Intercompany

Distribution
Channel
02 Wholesale

Distribution
Channel
01 Direct Sales

Distribution
Channel
03 Intercompany

Distribution
Channel
02 Wholesale

Distribution
Channel
01 Direct Sales

Product Division
Divisions 01
Product Division
Divisions 01

Sales Organisation
BP0X
Sales Organisation
BP01

Organizational Elements - SD

Sales Organization
Legal Selling Unit Responsible for Revenue and Product Liability
Sales Orders belong to One Sales Organization(Header Level
Assignment).
Master Data Maintenance for Customers, Pricing at Sales Organizatin
Level
Sales Organization Assigned to a Company where Sales Revenue is
Recognized(Links SD & FI)
Plants Assigned to a Sales Organization

Organizational Elements - SD

Distribution Channels:
A sales organization can be subdivided into several distribution chains which
determine the responsibility for a distribution channel.
e.g.: Wholesale, Retail sale etc ( Business verticals used in Legacy system)

Division:
Division is defined as a logical grouping of products for control and reporting
for Sales
All products necessarily need to be classified under a division for Sales &
Distribution
e.g. : Personal computers, Entertainment Electronics etc(product verticals in
Legacy system)

Organisational Structure Sales & Distribution

Sales Area:
SD is organised according to sales organisation, distribution channel and division.
A combination of these three organisational units forms the sales area. Creating a
sales area allows you to exclude certain combinations of the different
organisational areas for authorisations or reporting purposes.
For example the sales area BP010101 represents sales organisation BP01
combined with Distribution Channel 01 and Division 01

Company Code
BP0X

Company Code
BP01

Organisational Structure - Logistics

Production Plant
BP01

Shipping Point BP01

Distribution Centre
BP02

Shipping Point BP02

Regional
Warehouse
BP03

Shipping Point BP03

Intercompany
Processing Plant
BP0X

Shipping Point BP0X

Organisational Structure Sales & Distribution

Organisational Element
Sales Organisation

An organisational unit in Logistics that structures the company according to its sales requirements. A
sales organisation is responsible for selling materials
EG 1000 represents Domestics Sales and 1100 represents Export Sales

Distribution Channel

The distribution channel represents the channel through which saleable materials or services reach
customers.
EG Typical distribution channels include wholesale and direct sales and other sales

Division

In the SAP R/3 System you can define a division-specific sales organisation. Product groups, i.e. divisions,
can be defined for a wide-ranging spectrum of products. For every division you can make customerspecific agreements on, for example, partial deliveries, pricing and terms of payment. Within a division you
can carry out statistical analyses or set up separate marketing procedures.
EG Division 01 Product Division 01

Sales Area

SD is organised according to sales organisation, distribution channel and division. A combination of these
three organisational units forms the sales area. Creating a sales area allows you to exclude certain
combinations of the different organisational areas for authorisations or reporting purposes.
For example the sales area BP010101 represents sales organisation BP01 combined with Distribution
Channel 01 and Division 01

Integrated Business Processes Overview

Procurement
Logistics Planning
Sales Logistics
Production
Finance / Asset Management

Purchasing Organisation
BP0X

Purchasing Organisation
BP01

Organisational Structure - Purchasing

Production Plant
BP01

Local Purchase Group

001

Distribution Centre
BP02

Local Purchase Group

001

Regional
Warehouse
BP03

Local Purchase Group

001

Intercompany
Processing Plant
BP0X

Local Purchase Group

001

Sequence of Organizational Elements

Sequence of Organizational Elements

Organization Element Materials Management

Plant
Storage Location
Purchasing Organization
Purchasing Group

Organizational Elements - Plant

Organizational Elements - Plant

Organization unit within logistics, serving to subdivide the enterprise according to
production, procurement, maintenance, and material planning activities.

Plant is a sub-division of company code, where detailed production planning

activities are carried out.

Typically a manufacturing location or a distribution center/warehouse

Organizational Elements - Plant

Organizational Elements - Plant

Material valuation is typically done at plant level.
Considerations for defining plant include
At what organizational level is detailed Material Planning

done?

At what organizational level is Material Availability checked?

At what organizational level are materials valuated?
India version considerations.
Master data maintenance.

Multiple plants can be attached to a single company code. One plant can
not be attached to more than one company code.

Plants
The points that were considered while identifying plants.
Material Valuation
Planning of Material and resources
Tracking of In transit stock movements
Profit centres definition
Excise related compulsions

Storage Location
An organizational unit allowing the differentiation of material stocks within a plant.
All data referring to a particular storage location is stored at storage location level

Storage location is a subdivision of a plant where materials are physically

located.

Could be a store for finished products and/or raw materials

Storage Location
Considerations in defining storage locations

Where are the materials physically located?

Who is responsible for the stocks?
Do the materials in the location have a clear identity?
Are receipt and issue transactions performed for the
materials at this location?
To which plant do the materials belong ?
What type of planning is performed for the materials
belonging to this location?

Multiple storage locations can belong to one plant. One storage location can not belong to
more than one plant.

Purchasing Organizations
Organizational unit which procures materials and services, negotiates
conditions of purchase from suppliers and bears responsibility for such
transactions.

Following forms of purchasing can exist

Corporate wide
Company Specific (cross plant within a company)
Plant oriented
Mix of the above

Purchasing Groups
Buyer or a group of buyers responsible for the procurement of a certain
materials or services.

Principle channel for companys dealing with vendors.

Not linked directly to any SAP organization entity. Mapping done through
material master data at plant level. Can be logically viewed as a
subdivision of purchase organization.

Considerations for purchasing groups

Responsibility sharing of material and service procurement activities for one
or more plants.

Degree of specialization amongst individuals

Logical grouping of procurement personnel

Organisational Structure - Storage Locations

Logistics Plant BP01

Standard
Standard Warehouse
Warehouse
0010
0010

Production
Production
0002
0002

Finished
Finished Product
Product
0003

Scrapping
Scrapping
0007
0007

Warehouse
Warehouse
0008
0008

HU/Production
HU/Production
0009
0009

Truck
Truck Tloc
Tloc
TR01
TR01

Service
Service Storage
Storage
YD01
YD01

Kanban
Kanban
YD02
YD02

Raw
Raw Material
0004
0004

Trading
Trading Goods
Goods BP02
BP02
0020
0020

Return
Return Parts
Parts
YD03
YD03

Lean
Lean WM&HU
WM&HU
0005
0005

Trading
Trading Goods
Goods BP03
BP03
0030
0030

Return
Return Parts
Parts
YD03
YD03

Standard SAP Business All-in-One Solution

delivers 19 Storage Locations

Empties
Empties Blocked
Blocked
0006
0006

Trading
Trading Goods
Goods BP0X
BP0X
0040
0040

FG&HU
FG&HU
YD05
YD05

Organisational Structure - Logistics (1)

Organisational Element
Plant

In Logistics a plant is an organisational unit for dividing an enterprise according to Logistics,

procurement, maintenance, and materials planning. A place where materials are produced, or goods and
services are provided. Up to 10 plants are provided.

Purchasing Organisation

An organisational unit in Logistics, subdividing an enterprise according to the requirements of

Purchasing. A purchasing organisation procures materials and services, negotiates conditions of
purchase with vendors, and is responsible for such transactions.
There is one Purchasing Organisation per plant for local purchasing
BP01 represents the Central Purchasing Organisation

Purchasing Group

A key for a buyer or group of buyers responsible for certain purchasing activities. The Purchasing Group
is :
Internally responsible for the procurement of a material or class of materials. The principal channel for
the companys dealings with its vendors
EG For Purchasing Org BP01 : Pur Gps : 001

Organisational Structure - Logistics (2)

Organisational Element
Shipping Point

An organisational unit in Logistics that performs 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.

Storage Location

An organisational unit allowing differentiation between the various stocks of a material in a plant.
For each plant there are up to four storage locations.
E.g. Plant BP01 can have storage locations.

Organizational Structure

Complete Organizational Structure

3000
Motor Sports
International, Inc US
Business
Area

Motor
Motor Sports
Sports International
International

02
02
Motorcycles
Motorcycles
3000
3000
US
US#1
#1

Purchasing
Organization
Division/
Plant

02
02
Motorcycles
Motorcycles

3000
3000
New
NewYork
York

Division

90
4000
90
4000
Access.
Access. Seattle
Seattle

3000
3000
US
USSales
Sales

Sales
Organization

Distribution
Channel

90
90
Accessories
Accessories

03
Retail
02
Motorcycles

90
Assess.

4000
4000
Motor
Motor Sports
Sports
International,
International, Inc
Inc
Canada
Canada