Materials Management MM Organizational Structure EGN 5620 Enterprise

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

MM Organizational Structure SAP Implementation

MM Organizational Structure Related Topics MM Organizational data & structures Organizational relationships January 2008 © SAP AG - University Alliances and The Rushmore Group, LLC 2008. All rights reserved. 3

Business Process Integration MM SD Master Data Rules Org Data FI FI MM SD FI FI MM MM SD SD January 2008 © SAP AG - University Alliances and The Rushmore Group, LLC 2008. All rights reserved. 4

MM Organizational Data Org Data MM MM January 2008 © SAP AG - University Alliances and The Rushmore Group, LLC 2008. All rights reserved. 5

Organizational Data A hierarchy • A multi level structure • Organizational units at each level of organization structure arranged according to tasks and functions Static data and rarely changed January 2008 © SAP AG - University Alliances and The Rushmore Group, LLC 2008. All rights reserved. 6

Organizational Structure Client Chart of Accounts Company Credit Control Area Fiscal Year Variant Controlling Area Company Code January 2008 © SAP AG - University Alliances and The Rushmore Group, LLC 2008. All rights reserved. 7

SAP Org. Structure ◦ Client ◦ Company ◦ Chart of accounts ◦ Company code ◦ Fiscal year variant ◦ Credit control area ◦ Controlling Area 8

Client (review) Highest hierarchical level in an SAP environment A complete database containing all the tables necessary for creating a fully integrated information system 9

Company 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) 10

Chart 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 company code in order to create the General Ledger for that company Several company codes can use the same chart of accounts January 2008 © SAP AG - University Alliances and The Rushmore Group, LLC 2008. All rights reserved. 11

Company Code (review) A legally independent entity Smallest organizational unit for which accounting can be carried out Business transactions are processed at this level Accounts are managed at this level Legal financial statements, such as the balance sheet and the income statement, are generated at this level required by US SEC (Securities & Exchange Commission) January 2008 © SAP AG - University Alliances and The Rushmore Group, LLC 2008. All rights reserved. 12

Fiscal Year Variant Specifies the accounting fiscal year for budget and reporting purposes Special 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 13

Credit 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 14

Controlling 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 15

Controlling Area (continued) Modules SD MM HR FI Overhead Cost Accounting Cost and Revenue Accounting Product Cost Controlling Profit Center Accounting Profitability Analysis 16

Cost Center Standard Hierarchy An 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 17

Cost 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 18

Cost Centers Designation Units 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) 19

Profit Centers primary revenue collection objects in the system posted to all balance sheet postings can be attributed by cost centers assigned to a single controlling area and a single company code grouped 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 January 2008 © SAP AG - University Alliances and The Rushmore Group, LLC 2007. All rights reserved. 20

SAP MM Organizational Structure Plant Valuation Area Storage Locations Shipping Point Purchasing Organizations Purchasing Groups January 2008 21

Plant Lowest valuation area Organizational level where Material Requirements (MRP) runs Generally used to describe a production site, a distribution center or centralized warehouse May be a physical or logical unit January 2008 © SAP AG - University Alliances and The Rushmore Group, LLC 2008. All rights reserved. 22

Valuation 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 January 2008 © SAP AG - University Alliances and The Rushmore Group, LLC 2008. All rights reserved. 23

Storage Location Subdivision 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 2008 © SAP AG - University Alliances and The Rushmore Group, LLC 2008. All rights reserved. 24

Organizational Relationship Plant/Storage Location Plant P 001 Storage Location 10 - Inventory January 2008 Storage Location 20 - Quality © SAP AG - University Alliances and The Rushmore Group, LLC 2008. All rights reserved. 25

Shipping 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. January 2008 © SAP AG - University Alliances and The Rushmore Group, LLC 2008. All rights reserved. 26

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 January 2008 © SAP AG - University Alliances and The Rushmore Group, LLC 2008. All rights reserved. 27

Purchasing Organization An 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 January 2008 © SAP AG - University Alliances and The Rushmore Group, LLC 2008. All rights reserved. 28

Organizational Structure Company Code C 001 Purchasing Organization – P 001 Purchasing Group N## January 2008 Plant P 001 Storage Location 10 - Inventory Storage Location 20 - Quality © SAP AG - University Alliances and The Rushmore Group, LLC 2008. All rights reserved. 29

Organizational Relationships Plant/Purchasing Organization (1) Company code C 001 Plant P 001 Purchasing Organization – P 002 One company code/plant – multiple purchasing organizations January 2008 © SAP AG - University Alliances and The Rushmore Group, LLC 2008. All rights reserved. 30

Organizational Relationships (Continued) Plant/Purchasing Organization (2) Plant P 001 Plant P 002 Purchasing Organization – P 001 Purchasing Organization – P 002 Each plant has its own purchasing organization January 2008 © SAP AG - University Alliances and The Rushmore Group, LLC 2008. All rights reserved. 31

Organizational Relationships (Continued) Plant/Purchasing Organization (3) Purchasing Organization – P 001 Plant – P 002 One purchasing organization for multiple plants January 2008 © SAP AG - University Alliances and The Rushmore Group, LLC 2008. All rights reserved. 32

Organizational Relationships (continued) Plant/Purchasing Organization (4) Purchasing Organization – P 001 Company Code C 002 Plant – P 001 Plant – P 002 One purchasing organization for multiple company codes January 2008 © SAP AG - University Alliances and The Rushmore Group, LLC 2008. All rights reserved. 33

Purchasing Group Responsible for specified purchasing activities Often used to identify individual buyers Used for reporting January 2008 © SAP AG - University Alliances and The Rushmore Group, LLC 2008. All rights reserved. 34

Organizational Relationships Purchasing Organization/Purchasing Group Purchasing Organization – P 001 Purchasing Group 001 January 2008 Purchasing Group 002 © SAP AG - University Alliances and The Rushmore Group, LLC 2008. All rights reserved. 35

SAP Modules using MM Warehouse management (WM) ◦ A SAP module that focuses on managing materials location in a warehouse ◦ No connection with its financial module January 2008 © SAP AG - University Alliances and The Rushmore Group, LLC 2008. All rights reserved. 36

Warehouse Management WM is not required for purchasing functionality of SAP ERP Many functions and elements can be performed outside of the module January 2008 © SAP AG - University Alliances and The Rushmore Group, LLC 2008. All rights reserved. 37

Warehouse Management Elements Receiving, identifying and sorting goods Placing goods into storage bins Taking inventory Monitoring and inspecting goods in storage Preplanning distribution of materials Picking and accumulating orders Packaging, loading and shipping goods January 2008 © SAP AG - University Alliances and The Rushmore Group, LLC 2008. All rights reserved. 38

Inventory Management & Warehouse Management Relationships Inventory Management (MM) Storage Loc. 10 Company C 001 Plant P 001 Storage Loc. 20 Company Code Plant P 002 Storage Loc. 30 Storage Loc. 40 Warehouse 1 Aisle 2 Rack 1 Storage Loc. Warehouse 1 Aisle 3 Aisle 1 Rack 1 Warehouse Management (WM) January 2008 Plant ABC 123 Warehouse Aisle 2 Aisle Storage Rack Quantity © SAP AG - University Alliances and The Rushmore Group, LLC 2008. All rights reserved. 39

MM Rules MM January 2008 © SAP AG - University Alliances and The Rushmore Group, LLC 2008. All rights reserved. 40

Rules define the parameters for Master Data and Transactions Rules determine functionality for Master Data and Transactions Rules are relatively fixed Rules change, when corporate policy changes January 2008 © SAP AG - University Alliances and The Rushmore Group, LLC 2008. All rights reserved. 41

Rules in Material Management • • • Fiscal Periods Account Groups Material Types Plant Parameters Purc. /Rec. /Inv. Tolerances Automatic Account Assignment Reservations Material Group Loading Group January 2008 © SAP AG - University Alliances and The Rushmore Group, LLC 2007. All rights reserved. 42

Global Bike, Inc. MM Organizational Structure

GBI. Organizational Structures Credit Control Area (GL##) Client (330) Fiscal Year Variant (K 1) Chart of Company Accounts (GL##) Code (US##) Controlling Area (NA##) Purchasing Organization (US##) Plant (DL## /MI##/SD## ) Cost Center Standard Hierarchy (NA##) RM## FG## Purchasing Group (N##) SF## TG## MI## N 10## N 10## N 11## N 12## Work center (ASSY/INSP/PAC K/MANT/SERV) NAEX 10## Shipping Point (DL##/MI##/SD##) NAEX 20## Cost center groups NAIS 10## Cost centers

Exercises: (Due Date 9/21/2015) 1. Define account group 2. Copy document number range 3. Set up company for payment transaction 4. Maintain number ranges for controlling 5. Define tolerance groups for employees 6. Define retained earnings account 7. Copy general ledger accounts 8. Create standard hierarchy 9. Maintain purchasing organization 10. Assign purchasing organization 11. Assign purchasing organization to plants 12. Create purchasing group 13. Group together valuation areas