Scribd
Upload
52 views

Organizational Structure in Materials Management

The document discusses the organizational levels involved in the procurement process in Materials Management. There are several key levels: client, company code, plant, storage location, purchasing organization, and purchasing group. The client represents a commercial group, company code is the accounting unit, plant structures production and logistics, storage location differentiates inventory, and purchasing organization and group handle purchasing contracts and activities. The valuation area is where inventory is valued and can be set at the plant or company code level.

Uploaded by

anand
Copyright
© © All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
Available Formats
Download as PPT, PDF, TXT or read online on Scribd
52 views

Organizational Structure in Materials Management

The document discusses the organizational levels involved in the procurement process in Materials Management. There are several key levels: client, company code, plant, storage location, purchasing organization, and purchasing group. The client represents a commercial group, company code is the accounting unit, plant structures production and logistics, storage location differentiates inventory, and purchasing organization and group handle purchasing contracts and activities. The valuation area is where inventory is valued and can be set at the plant or company code level.

Uploaded by

anand
Copyright
© © All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
Available Formats
Download as PPT, PDF, TXT or read online on Scribd
You are on page 1/ 16

Organizational structure in Materials

Management
Organizational Levels in MM or External
Procurement Process

• Client
• Company Code
• Plant
• Storage Location
• Purchasing Organization
• Purchasing Group

VACS Technology Pvt. Ltd.


Objectives

At the end of this unit, participants should be able to:-

Describe the organizational levels involved in the procurement


process

Define the most important characteristics of these


organizational levels

Define the organizational element

VACS Technology Pvt. Ltd.


Roles of Organizational Unit

Comprehensive Integrated

How business processes are carried out


What information is generated (internal and external reporting)
How business objects (for example sales orders, purchase
orders) are used
How R/3 functionality is distributed among different systems.

Enterprise-wide World-Class

VACS Technology Pvt. Ltd.


Client

The client is a commercial, organizational unit within the


R/3 system, with its own data, master records and sets of
tables.
From the business perspective, the client forms a corporate
group.

VACS Technology Pvt. Ltd.


Company Code

The company code is the smallest organizational unit for


which you can have an independent accounting.

It is a legal entity for which the financial statements such as


Balance Sheet, Profit & Loss Account are created.

It may represent a company within a corporate group.

VACS Technology Pvt. Ltd.


Plant

A plant is an organizational logistics unit that structures the


enterprise from the perspective of production, procurement,
plant maintenance and materials planning.

A plant can be a manufacturing facility or a branch within a


company.

VACS Technology Pvt. Ltd.


Attributes of a Plant

A plant has an address, language and belongs to a country


Has its own material master data
Plays an important role in the following
Service management
Material valuation
Inventory management
MRP
Production
Costing

VACS Technology Pvt. Ltd.


Storage Location

An organizational unit that allows the differentiation of


material stocks within a plant.

Inventory management and physical inventory are carried out


on a quantity basis at storage location level, within a plant.

VACS Technology Pvt. Ltd.


Organizational Levels in Inventory Management

Client

Company Code Company Code


0001 0002

Plant Plant Plant


1000 2000 3000

Storage Loc Storage Loc Storage Loc


0001 0002 0003

VACS Technology Pvt. Ltd.


Purchasing Organization and Purchasing Group

A purchasing organization is an organizational level that


negotiates conditions of purchase with vendors for one or more
plants or companies. It is legally responsible for completing the
purchasing contracts.

A purchasing group is the key for a buyer or group of buyers


responsible for certain purchasing activities. It is linked only to
a material in a plant and not assigned to any other organizational
element.

VACS Technology Pvt. Ltd.


Plant Specific Purchasing Organization

Company Code

Plant 1 Plant 2

Purchasing Purchasing
organization 1 organization 2

VACS Technology Pvt. Ltd.


Cross Plant Purchase Organization

Company Code

Plant 1 Plant 2

Purchasing
Organization

VACS Technology Pvt. Ltd.


Cross Company Code Purchase Organization

Company Code 1 Company Code 2 Company Code 3

Plant 1 Plant 2 Plant 3

Purchasing
Organization

VACS Technology Pvt. Ltd.


Valuation Area

Valuation
Area

Company Code Plant

The valuation area is an organizational level at which Quantity and value


gets updated means materials is valuated
It can be possible to set valuation area as a Plant or company code

SAP recommends set valuation area as a plant in case Production Planning


and Product Costing are required

VACS Technology Pvt. Ltd.


* VACS Technology Pvt. Ltd. *

You might also like