This article is the continuation of Multiple Organisation.
Important concepts in R12 – Finance module – Multi ORG
Inventory Organisation:
It is the lowest level. It is the physical manufacturing company which tracks inventory and balances. (Outgoing and Incoming) It is used in supply chain. Inventory is a warehouse or a store where all the materials are kept. It is linked to the operating unit.
To summarize on the top would be the business group then ledgers and each ledger would have multiple legal entities assigned to it under which operating units are assigned and then inventory organisation. Inventory organisation is a place where materials are procured and materials are received and includes sales.
Benefits of multiple organisations:
Supports number of organisations, under a single installation, even if they use different ledgers.
Supporting Flexible Organisation Models
Data access is secured, allowing users to access relevant information only. It could be done through a single instance. Though it is shared data for each operating unit it would be secure.
Multi Org Model or Structure:
The multi org model provides a hierarchy that dictates how transactions flow through different business organisations and how they interact with each other. 
Any company that is going to use oracle has to define the above values. Business group is at the top most level where the HRMS information is stored. Under business groups there can be multiple SOBs (Set of Books). In normal practice each country would have its own set of books, (chart of accounts, currency, calendars and combinations). Then there could be multiple legal entities which are legal reporting companies, which would have its own registration number.
For Example, in UK, for the same customer there could be multiple legal operations across. Operation units include all AP and AR transactions. It comprises all sub ledger entries are done at the operating unit level. Operating unit is a critical concept to understand in the accounting prospective. All sub ledger accounting happens at the OU level.
At the last is the inventory organisation, where the material stock or inventory is tracked. Each of these has a parent child flow. Operating units can have multiple inventory orgs. One inventory orgs cannot be assigned to multiple operating units. One operating unit can be linked to only one legal entity. under one legal entity there could be multiple operating units. There could be multiple set of books and once the legal entity is assigned to a set of books, it cannot be assigned to another set of books.
The above was in the previous version; the same thing is there in the release 12. It does not have set of books and it is replaced by ledger
This is the overall architecture.
The reason for the inventory organisation being under the operating unit could be explained with an example. For example there is an operating unit in USA – it could have multiple warehouses for raw materials and then for finished goods etc but it comes under the operating unit in USA or is associated with it.
Release 11 versus Release 12:
The multi org concepts and structure remains the same in release 12. Differences relating to the setups are as follows.
- Set of books are replaced by ledgers in release 12.
- Legal entities are created using accounting setup manager or legal entity manager/ configurator in release 12.
- In the previous version the option was to define the legal entity in the hrms level and then it was linked up to the organisation, In release 12 it is all a part of the General ledger.
- Operating units can also be created in accounting setup manager itself in release 12.
- Responsibility:
For example there are three operating units in India, USA and China. It would be required that Indian users should be able to enter data using Indian related responsibility, like India payable and India receivable. The Indian user should not be able to see US data, this restriction in oracle is through responsibility and the access profiles set to the responsibility. Responsibility matrix should be defined very carefully before the structure is designed - The AP and AR modules that have to be used and they probably have multiple level. (Like a manager level responsibility, inquiry level responsibility, entry level responsibility) Each module and combination of the level is to be defined and is to be linked to the operating unit used. So for a user in India though the server is shared, (it could have the US data and UK data and Indian data), to ensure the Indian views only the Indian data, a UK user would only be able view UK data so that access is granted to a responsibility, so each user based on the country or location, based on how the business rules are defined will have to have that many responsibilities defined. A person could be in accounts payable activity making invoices to suppliers and other person may be having only view access where he could only view the data. A manager doesn’t have to enter anything and wants to view reports, so it would be an inquiry responsibility and may have an entry responsibility. A lead the one entering may not be able to validate the information and the next level may validate. Basis of this the number of responsibilities could be defined. So a single instance having access to all units but based on the user, the access could be defined. The access is a responsibility. Responsibilities are attached to the users.
User is the person logging in and should be able to see only the responsibilities assigned to him. So responsibility is one of the key terms.
Responsibility determines which operating units you can access when oracle applications are used.
- Operating units are not associated with legal entities. Operating units are assigned to ledgers and a default legal context.
As compared with R11 in R12 multiple operating units can be assigned to a single responsibility.
(Multi org access control), here the security profile has to be attached to the particular user and that user could enter through a single responsibility for multiple operating units invoices and payments. MOAC security profile could be set at the user level or the responsibility level, depends on the requirement.
- To use multiple organisations, you must define an accounting setup with at least one legal entity.
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