Enterprise Structure in SAP MM

In this blog post, a brief discussion will be made on Enterprise Structure in SAP.

Running any business requires different locations and various places to have the material flow as well as unstoppable financial transactions.

So, it is very important to map these places and locations in the ERP so that report can be obtained with reference to the location.

You can get the report below.

What are the sales in the New York region sales office?

What is the production cost in Shanghai Plant?

How many quantities are sold in Mumbai Region Distribution center?

So, it is important to create those organizational structures in SAP.

And all other configuration data and master should be created based on this organizational structure.

The organizational units can be created for some additional purpose like legal compatibility, to improve the process.

These units can be created a hierarchical manner like how many storage locations are there under on plant.

When you are creating these organizational structures, you have to create them one by one and these organizations need to be assigned to the required elements then only the next level process like configuration and master data creation can be mapped.

These structures are helping the users in the organization in a better way to understand the process and the way of working.

The list of each organizational units are listed below, you can check out,

1. Client
2. Company code
3. Plant
4. Purchase organization
5. Sales Organisation
6. Storage Location
7. Purchase Group
8. Sales Group

Client

The client is the topmost level of the hierarchical in organizational structure and this will be maintained and created by the Basis consultant.

When you are doing the login, you will notice the client on its opening page of SAP GUI.

Check the below screenshot for the Client.

The client can be used to create like development client, quality client, Production client, Golden client, sandbox client, testing client.

Company code

The company code is the next level in the hierarchy after the client and it is used in accounting, this will be referred to in the all-accounting entries, the reports will be taken using the company code like P&L – Profit and Loss Account, Balance sheet, and Trial Balances. 

This is the second most organizational structure, smallest, and legal entity.

All financial and costing related transaction will be based on company code only. An organization can have more than one company code.

Plant

The plant is one of the organizational units in the structure that can be used within the company code.  Once a plant is created you need to assign to the company code and under which all other organizational units like storage location, master data will be created.

All the activities related to any business can be captured in the plant level organizational unit. The procurement of the materials through purchasing from outside and making the product in-house.

The plant can be created for different purposes like – Purchasing plant, Production Plant, Trading plant, maintenance plant, and Virtual Plant.

Storage Location – SLOC

The storage locations are the places in which the material stock will be physically kept. The physical availability of the storage location will be represented in SAP.

The storage location is the next level org structure under the plant in which master data like the material master, bill of material, work center, routing, resources.

Multiple storage locations can be created within a plant to store the material stock. The followings are the example of the storage location,

The storge location can have only four alphabetical or numerical values in the nomenclature.

Example of SLOC

Raw material storage location                   –  RMSL

Semi-Finished Goods storage Location    –  SFSL

Finished Goods Storage Location              – FGSL

Trading Goods Storage Location               – TRSL

Purchasing Organisation

The purchase organization is used to record all the data relevant to the purchase. This is the topmost highest point of the organizational unit in SAP MM.

The purchase organization needs to be assigned to the company code and the plant can be assigned to the purchase organization.

This organizational unit is responsible for all external procurement for material, service, Stock transfer order, and third-party process.

Purchasing Group

The buyer or purchasing department can be created with the purchase group like domestic purchase, the selection of purchasing group is the mandatory one and this can be assigned to the material master also.

The person or group assigned to the material is wholly responsible for the material/services procurement activities.

Sales Organisation

Like, the purchase organization records all purchase-related information, the sales organization records all sales-related information.

Sales Organisation is the top-most organizational unit in sales and distribution of material and service material.

Sales Organisations can be created and assigned to the company code.

Sales Organisations should be selected while creating sales documents in SAP. The business transaction related to the sales of the product or services will be assigned with the selection of sales organization.

Distribution channel, sales office, division, and sales group are can be selected while creating the sales documents.

Sales Group

A sales group can be created in SAP to represent the different groups of the sales team with a unique name.

When a sales order is created by the sales team, they assign their name to that and the users also can take this report based on the sales group.

This is optional to create and assign them to the sales order.

Please drop the below comments if you have any questions,