Materials Management (MM) Organizational Structure EGN 5620 Enterprise Systems Configuration Fall, 2015

Materials Management Materials Management (MM) Organizational (MM) Organizational

StructureStructure

EGN 5620 Enterprise Systems ConfigurationEGN 5620 Enterprise Systems Configuration

Fall, 2015Fall, 2015

MM Organizational Structure MM Organizational Structure

SAP ImplementationSAP Implementation

January 2008January 2008

© SAP AG - University Alliances and © SAP AG - University Alliances and The Rushmore Group, LLC 2008. All The Rushmore Group, LLC 2008. All rights reserved. rights reserved. 33

MM Organizational Structure MM Organizational Structure Related TopicsRelated Topics

MM Organizational data & structures

Organizational relationships



Business Process Integration Business Process Integration

FI

MM

SD

Org

Dat

a

Rules

FI

MM

SD

Master D

ata

FI

MM

SD

FI SDMM



MM Organizational DataMM Organizational Data

MM

Org

Dat

a



Organizational DataOrganizational Data

A hierarchy • Multi level structure• Organizational units at each level arranged

according to tasks and functions

Static data and rarely changed



Client

CompanyChart ofAccounts

CompanyCode

Fiscal YearVariant

Credit ControlArea

Organizational Structure

Controlling Area



SAP Org. StructureSAP Org. Structure

◦Client◦Company◦Chart of accounts◦Company code◦Fiscal year variant◦Credit control area◦Controlling Area



Client (review)Client (review)Highest hierarchical level in an SAP

environmentA complete database containing all the

tables necessary for creating a fully integrated information system

Master records are created at the client level



CompanyCompany

Consolidated financial statements are created at the company level

A company can include one or more company codes

All company codes must use the same chart of accounts and fiscal year

Company is not required in the definition of an enterprise (optional)



Chart of AccountsChart of Accounts

A Chart of Accounts contains a complete list of all of the accounts utilized in the General Ledger for a given company

A chart of accounts must be assigned to every company code in order to create the General Ledger for that company

Several company codes can use the same chart of accounts



Company Code (review)Company Code (review)A legally independent entity Smallest organizational unit for which

accounting can be carried out Business transactions are processed at

this levelAccounts are managed at this levelLegal financial statements, such as the

balance sheet and the income statement, are generated at this level required by US SEC (Securities & Exchange Commission)



Fiscal Year VariantFiscal Year VariantSpecifies the accounting fiscal year

for reporting purposesSpecial periods are created to aid in the

quarterly or year-end adjusting process completed prior to preparing financial statements

A single fiscal year variant is assigned to each company code



Credit Control AreaCredit Control Area

An organizational unit or area of responsibility created to control customer credit limits

A company code is assigned to one and only one credit control area

Multiple company codes can be assigned to one credit control area


© SAP AG - University Alliances and © SAP AG - University Alliances and The Rushmore Group, LLC 2007. All The Rushmore Group, LLC 2007. All rights reserved.rights reserved. 1515

Controlling AreaControlling Area

An organizational unit that serves to broadly define a managerial accounting and reporting system

Each company code can be assigned to one and only one controlling area

Controlling areas can consist of multiple company codes thereby enabling cross-company allocations



Controlling Area (continued)Controlling Area (continued)

ModulesSDMMHRFI

Cost andRevenue

Accounting

ProfitCenter

Accounting

Overhead CostAccounting

ProfitabilityAnalysis

Product CostControlling



Cost Center Standard HierarchyCost Center Standard HierarchyAn organizational unit that serves to refine

and focus a managerial accounting and reporting sub-system

Each standard hierarchy is attached to the appropriate Controlling Area

All cost centers (groups) of interest must be entered in the Standard Hierarchy

A mapping of responsibility to individual managers and cost centers facilitate:

Expense collection Expense tracking Expense reporting



Cost Center GroupsCost Center Groups

Logical groupings of cost centers in the standard hierarchy to establish accountability and responsibility for one or more cost centers

Facilitates reporting, planning, and allocating costs at a more aggregated level



Cost Centers DesignationCost Centers DesignationUnits that are distinguished, for example,

by area of responsibility, location, or type of activity◦Copy center◦Security department◦Maintenance department

One or more value-added activities are performed within each cost center

Can be permanent or temporary (e.g., internal order)



Profit CentersProfit Centersprimary revenue collection objects in

the systemposted to all balance sheet postingscan be attributed by cost centersassigned to a single controlling area

and a single company codegrouped together into a hierarchy to

represent the organization structure for analysis of income versus expenditure for different parts of a organization

Some organizations don’t have profit centers



SAP MM Organizational StructureSAP MM Organizational Structure

PlantValuation AreaStorage LocationsShipping PointPurchasing OrganizationsPurchasing Groups



PlantPlant

Lowest valuation areaOrganizational level where Material

Requirements (MRP) runsGenerally used to describe a production

site, a distribution center or centralized warehouse

May be a physical or logical unit



Valuation AreaValuation Area

Valuation area determines at which level a material is valuated (inventory value is established)

SAP ERP allows valuation at the company code or plant level, but recommends valuation area be set at the plant level



Storage LocationStorage LocationSubdivision of a plant Where materials are managed (inventory

management)◦Raw Materials◦Finished Products◦Semi-finished products◦Trading materials◦Miscellaneous materials◦Maintenance, Repair, and Other (MRO) materials

May be a physical or logical unit

January 2008January 2008© SAP AG - University Alliances and The Rushmore Group, LLC 2008. All rights © SAP AG - University Alliances and The Rushmore Group, LLC 2008. All rights reserved. reserved. 2525

Organizational Relationship Organizational Relationship

Plant/Storage Location

Storage Location20 - Quality

Storage Location10 - Inventory

Plant P001



Shipping PointShipping Point

Shipping points are independent organizational entities within which processing and monitoring of the deliveries as well as goods issue is carried out.

A delivery is processed by one shipping point only.



SAP (Sub)modules in MM (I)SAP (Sub)modules in MM (I)1. Purchasing Management

SAP sub-module that involves the acquisition of goods and services to support the creation of goods and services in the organization

Master data for the purchasing management exists in the (MM) as well as the (FI) modules

It interfaces with the Production Planning (PP), and Quality Management (QM) modules

2. Inventory Management A SAP sub-module that involves goods movement,

material stock and inventory controlling, material documents, & period processing



Purchasing OrganizationPurchasing OrganizationAn organizational unit

• responsible for procuring materials or services for one or more plants and for negotiating general conditions of purchase with vendors.

• Legal responsible for all external purchase transactions.

A purchasing organization can be assigned to more than one company code


Organizational StructureOrganizational Structure

Purchasing Organization – P001

Company CodeC001

Storage Location20 - Quality

Storage Location10 - Inventory

Plant P001

Purchasing GroupN##



Plant/Purchasing Organization (1)

One company code/plant – multiple purchasing organizations



Plant P001

Organizational Relationships Organizational Relationships

Company code C001




Each plant has its own purchasing organization


Plant P002


Plant P001

Organizational Relationships Organizational Relationships (Continued)(Continued)



One purchasing organization for multiple plants

Plant – P002Plant – P001


Organizational Relationships Organizational Relationships (Continued)(Continued)


Organizational RelationshipsOrganizational Relationships(continued) (continued)


One purchasing organization for multiple company codes

Company CodeC002

Company CodeC001


Plant – P002Plant – P001



Purchasing GroupPurchasing Group

Responsible for specified purchasing activities

Often used to identify individual buyersUsed for reporting


Organizational Relationships Organizational Relationships

Purchasing Organization/Purchasing Group

Purchasing Group002

Purchasing Group001




SAP Modules using MMSAP Modules using MMWarehouse management (WM)

◦A SAP module that focuses on managing materials location in a warehouse

◦No connection with its financial module



Warehouse ManagementWarehouse Management

WM is not required for purchasing functionality of SAP ERP

Many functions and elements can be performed outside of the module



Warehouse Management ElementsWarehouse Management Elements

Receiving, identifying and sorting goodsPlacing goods into storage binsTaking inventoryMonitoring and inspecting goods in storagePreplanning distribution of materialsPicking and accumulating ordersPackaging, loading and shipping goods


Company C001

Plant P001 Plant P002

Storage Loc. 30Storage Loc. 10

Warehouse 1 Warehouse 1

Aisle 1 Aisle 1 Aisle 2Aisle 2 Aisle 3

Rack 1Rack 1 Rack 1

ABC123

Storage Loc. 40Storage Loc. 20

Inventory Management & Warehouse Inventory Management & Warehouse Management RelationshipsManagement Relationships

Inventory Management(MM)

Warehouse Management (WM)

Company Code

Plant

Storage Loc.

Warehouse

Aisle

Storage Rack

Quantity



MM RulesMM Rules

Rules

MM

MM



RulesRules

Rules define the parameters for Master Data and Transactions

Rules determine functionality for Master Data and Transactions

Rules are relatively fixedRules change, when corporate policy

changes



Rules in Material ManagementRules in Material Management

• Fiscal Periods• Account Groups• Material Types• Plant Parameters• Purc./Rec./Inv.

Tolerances • Automatic Account

Assignment• Reservations• Material Group• Loading Group

Global Bike, Inc. Global Bike, Inc. MM MM

Organizational StructureOrganizational Structure

GBI. Organizational Structures GBI. Organizational Structures

Plant (DL## Plant (DL## /MI##/SD## _)/MI##/SD## _)

Client (330) Client (330)

Chart of Chart of Accounts (GL##)Accounts (GL##)

CompanyCompanyCode (US##)Code (US##)

Fiscal YearFiscal YearVariant (K1)Variant (K1)

Credit ControlCredit ControlArea (GL##)Area (GL##)

PurchasingPurchasingOrganization Organization

(US##)(US##)

Purchasing Purchasing Group (N##)Group (N##)

Controlling Controlling Area (NA##)Area (NA##)

RM##RM## FG##FG##

Cost Center Standard Cost Center Standard Hierarchy (NA##)Hierarchy (NA##)

NAEX10##

Work center Work center (ASSY/INSP/(ASSY/INSP/PACK/MANT/PACK/MANT/

SERV)SERV)

Shipping Point (DL##/MI##/SD##)Shipping Point (DL##/MI##/SD##)

SF##SF## TG##TG##

MI##MI##

N10##N10## N10##N10## N10##N10## N10##N10## N10##N10##

N11##N11## N12##N12##

NAIS10##NAEX20##

Cost centersCost centers

Cost center Cost center groupsgroups

Exercises: Exercises: (Due Date 9/5/2015)(Due Date 9/5/2015)

1. Define account group2. Copy document number range3. Set up company for payment transaction4. Maintain number ranges for controlling5. Define tolerance groups for employees6. Define retained earnings account7. Copy general ledger accounts8. Create standard hierarchy9.Maintain purchasing organization10.Assign purchasing organization11. Assign purchasing organization to plants12.Create purchasing group13.Group together valuation areas

Documents

Materials Management (MM) Organizational Structure EGN 5620 Enterprise Systems Configuration Fall, 2015