In the modern enterprise resource planning landscape, SAP Organizational Structure stands as a cornerstone, shaping the digital landscape to mirror the intricate tapestry of an organization’s real-world hierarchy.
As businesses navigate the complexities of data management, workflow optimization, and efficient resource allocation, SAP’s organizational framework serves as a fundamental blueprint, forming the backbone of their SAP applications, aligning technology with organizational structures, and facilitating role-based access control.
This article discusses the key components and capabilities of SAP Organizational Structure, how it improves collaboration across a complex enterprise ecosystem, and where our team of expert SAP consultants can come in to help.
What is Organizational Structure in SAP?
The SAP ERP organizational structure exists to build a framework in which all critical business processes can be processed and managed. Users can leverage several organizational units to represent their company’s legal and organizational structure, enabling the creation of enterprise structures from an accounting, sales and distribution, and materials management perspective.
Understanding the SAP Organizational Structure Hierarchy
SAP Organizational Structure refers to the hierarchical arrangement of entities within the SAP system to represent a business’s administrative and reporting structure.
In SAP ERP (Enterprise Resource Planning) and other critical SAP applications, the organizational structure is a fundamental concept used to model the organizational units, such as departments, positions, and employees, that are relevant to the business processes supported by the SAP system.
Here are a few key components of the SAP organizational structure:
1) Client Level
Client is the highest level in the organizational structure SAP hierarchy, offering separate master data records, tables, and configuration settings. A client represents an organizational unit or business entity and enables users to enter specifications valid for all company codes and organizational structures across the enterprise landscape.
2) Company Code
Company code is the smallest organizational unit in which a self-contained set of accounts can be drawn for external reporting. A company code represents an independent accounting unit within a client and has its own profit, loss, and balance statements.
3) Purchasing Organization
A purchase organization is an organizational unit designed to subdivide an enterprise structure according to the specific requirements of the Purchasing group. With the purchasing organization level, users can procure materials or services and negotiate the conditions of each purchase with vendors.
4) Plant Level
A plant represents a physical location where goods are produced or services are provided and is often associated with a specific geographical location relevant to logistics and production processes. It serves as a subdivision between enterprise units according to procurement, production, maintenance, and materials management aspects.
5) Storage Location
A storage location is an organizational unit that differentiates material stocks within an individual plant. The storage location level holds all the data related to a particular storage location.
Navigating SAP ERP Organizational Structure
Here’s a closer look at how organizational elements and structures work in different SAP modules:
Organizational Structures in SAP SD
Users can leverage multiple structures to represent their company’s legal and organizational structure, providing a framework where all business transactions can be processed. Organizational levels and units in SAP Sales and Distribution (SD) can be seamlessly integrated with those in the SAP Financial Accounting (FI) and Materials Management (MM) modules.
A sales area is comprised of three organizational unit forms, including:
- Sales organization: An organizational unit within logistics that structures the company according to sales requirements and is responsible for the sale and distribution of goods and services.
- Division: Users can define a division-specific sales organization for a wide range of products, enabling the creation of customer-specific agreements for every division and statistical analysis of each division.
- Distribution channel: A channel through which users can distribute saleable materials or services to customers for wholesale, retail, and direct sales.
Organizational Structures in SAP MM
When it comes to managing organizational structures in SAP Materials Management, users can leverage both the plant and storage location level to effectively monitor material stocks and store the specific locations in which each material is stored.
Each plant is assigned to a company code, ensuring stocks and stock values are monitored separately. Plants can be a place of production, a single storage location, or a combination of related storage locations based on material and storage needs for each organizational unit.
Organizational Structures in SAP Accounting
With organizational structures in the SAP Accounting module, users can represent specific groups using client and company codes. The client level typically represents a group within a company, while the company code level represents the entire company as an independent accounting and legal entity.
Linking Different Organizational Structures in the SAP System
Users can create a seamless link between sales organizations and company codes by assigning sales organizations and plants to specific areas of the enterprise structure.
Several sales organizations can be active within one company code; however, a plant is always linked to only one company code but can be assigned to different sales organizations.
In situations like inter-company sales processing or other internal operations that require connections between systems, users can also execute business transactions across different company codes.
Main Advantages of Organizational Elements in SAP
Here’s a closer look at a few key advantages of the SAP organizational hierarchy for business users:
Accurate Reporting and Analysis
The SAP structured hierarchy facilitates more transparent reporting and analysis, enabling users to easily access and analyze data from different organizational units, such as departments, divisions, or plants. This allows better visibility into performance metrics, financial results, and other vital indicators relevant to their specific areas of responsibility.
Role-Based Access Control
SAP uses intelligent organizational structure functionality to implement role-based access control that assigns user roles based on individual positions and organizational responsibilities. This ensures individuals have access to the data and functionalities relevant to their roles, contributing to enhanced security and data integrity across the entire organization.
Organizational structure components in SAP promote consistency in data management and support reliable reporting, analytics, and business decisions. By aligning data with specific organizational units, users can maintain standardized information, ensuring accuracy and coherence across the system.
Efficient Business Processes
SAP’s organizational structure aligns with existing business processes, ensuring users interact with the system to reflect the organization’s real-world structure. This alignment helps streamline and optimize business processes, increasing efficiency and productivity across the board.
The SAP Organizational Structure supports integrated workflows, allowing for the smooth flow of information and tasks across different departments and functions. This integration minimizes information silos and promotes collaboration among users, leading to improved coordination and faster decision-making.
How Can We Help?
From helping you navigate complex company codes to outlining an organizational unit to improve enterprise organization, connecting organizational units to different storage locations or profit centers, or just getting started on your SAP journey, Surety Systems is here to help.
Our senior-level, US-based SAP consultant team has the knowledge, skills, and experience to handle all your critical project needs and achieve critical organizational management objectives over time.
Getting Started with Us
Interested in learning more about organizational units in the SAP architecture or how they can help organize your enterprise structure more effectively? Ready to get started on a project with our team of expert SAP consultants?
Contact us today for more information!