SAP CROSS MODULAR ORGANISATIONAL HIERACRCHY

The Various Modules provided by SAP ERP consists of an Organizational hierarchy to help its customers map its business structure in the system. FI is mapped in the system considering its internal and external reporting requirements. Likewise, Material Management has its own organizational elements, Sales Distribution has its own set of elements and so on. It helps in creating diversity amongst modules and also by mapping these units to each other we can achieve integration at the same time. We can also by doing so have an 1:n mapping using one company code to map multiple MM Organizational elements therefore including physical locations for the business.

Let us see a combined organizational hierarchy for an organization as a whole with various modules and its mapping. A brief definition on these organizational units will help you understand the purpose and their position in the hierarchy

Material Management

Purchasing Org: Purchasing Organization is an organizational unit under Company Code or plant, which is responsible for external procurement activities as per requirement. It can be specific to a Plant or Company Code. A purchasing organization can be further divided into purchasing groups.

Purchasing Group: Purchasing Group is an organization unit, which is responsible for day-to-day procurement activities within an organization.

Plant: Plant is an organizational unit within a Company where activities take place. A plant will produce goods and makes goods available for use by the company.

Storage Location: Storage Location differentiates between different material stocks in a Plant. It is a place where stock is kept physically. Plant can be consisting of various storage locations.

Controlling

Operating Concern: Operating Concern is the highest level in SAP Controlling Module if you want to implement SAP profitability analysis (COPA). Your business will be divided into segments (by product, marketing and other segments) and each segment can be analyzed through this module. Its creation is client independent.

Controlling Area: An organizational unit within a company used to represent a closed system for Cost Accounting Purposes. A controlling Area can be attached to a single or multiple Company codes with different currencies but a single operating chart of Account. All internal allocations refer exclusively to objects in the same controlling area.

Sales and Distributions.

Sales Area: SD is organized according to Sales Organization, Distribution channel and Division. A combination of these three organizational unit forms a Sales Area.

Sales Organization: It is an organizational unit within Logistics that structure the company according to the sales requirements. A sales organization is responsible for sales and distribution of goods and services. It represents the selling unit as a legal entity. A sales organization can be divided into several distribution chains, which determine the responsibility for a distribution channel. Several divisions can be assigned to a sales organization. Each organization is assigned exactly one company code for which you enter all accounting details of the sales organization.

Distribution Channel: The distribution channel represents the channel through which saleable materials or services reach customers. For Example: Wholesale, retail and direct sales. A single distribution channel can be assigned to one or more sales organizations.

Divisions: Product groups i.e. divisions can be defined for a wide range of products.

Human Resources:

Personnel Area: A Personnel Area is a Personnel Administration specific unit and is a sub-unit of Company Code. The Personnel Area represent a subdivision of the company code. The Personnel Area can be used to perform system evaluation of data or to perform authorization checks. Personal Area is assigned to a Company code.

Personnel Sub Area: A Personnel Sub Area is an Organizational unit that represents a specific area of the company organized according to certain aspects of personnel, time-management and payroll. The following business subtasks belong to a sub area:

To visualize an overall Organizational Structure of a Company the diagram below will help to understand an Overview and its hierarchy.

In the above diagram I would like to highlight some fundamental concepts considering its mapping relations and individuality. The below points will help you understand the ratio of mapping .1 to n or 1 to 1 relationship that exist between the organizational units, hence making your configuration simple. These concepts need to be very clear in order to face the client and construct a blue print for their organization in the Implementation stage.

1. A controlling area can be assigned to multiple Company Codes but one Company code can have only one Controlling Area.
2. One Plant can be attached to Various Purchasing Groups.
3. The combination of a Sales Organization, Distribution channel and division comprises of a Sales Area.
4. A client can have multiple Company codes.
5. The client also is for your system landscape where in your Development client Production clients are different.
6. A company code should be assigned to a single purchasing organization and the Purchasing Organization to multiple plants, that ways assigning multiple plants to company code.

Rahi Shah