03 SAP Organization Structure of Materials Management.

The Organizational Structure in SAP Systems

Client/Company
As the highest organizational unit in an SAP system, the client can be a corporate
group and can represent a company or a conglomerate of companies. For example,
consider a fictional corporate group called ABC Corporation, which has companies

such as Steel, . If ABC Corporation wants to implement SAP software for all of its companies in a single instance, then it should be represented as a client. On the other hand, if the different companies install the SAP software individually, then each company will have one SAP instance, and the individual companies will represent the client.

Company Code
The company code is the smallest organizational unit for which you can have an
independent accounting department within external accounting. For example, a
corporate group (a client) may have one or more independent companies, all of
which have their own SAP General Ledger (G/L) account, balance sheet, and profit
and loss (P&L) account. Each of these independent business entities needs to be
created in the SAP system as separate company codes.

Plant
In industry terminology, a manufacturing facility is called a plant. In an SAP system however, a plant can be a manufacturing facility, sales office, corporate head
office, maintenance plant, or central delivery warehouse. In general, the plant can
be any location within a company code that is involved in some activity for the

company code.

Storage Location
A storage location is a place within a plant where materials are kept. Inventory
management on a quantity basis is carried out at the storage location level in the
plant, as is physical inventory. Physical inventory is the process of verifying physical
stock with the system stock. If any differences exist in stock quantity, system stocks
are updated with actual physical stock quantity. Physical inventory is carried out

at each storage location level.

Purchasing Organization
In industry terminology, the purchasing department deals with vendors and is
responsible for all procurement activities. The purchasing department is mapped
as a purchasing organization in the SAP system. Purchasing organizations negotiate
conditions of purchase with vendors for one or more plants, and they are legally

responsible for honoring purchasing contracts.

Purchasing Group

A purchasing group is a term for a buyer or group of buyers responsible for certain
purchasing activities. Because a purchase order is a legal document, the purchasing
group is represented on a purchase order or contract. The purchasing group can
also play an important role in reporting various purchasing transactions. In an SAP
system, a purchasing group isn’t assigned to purchasing organizations or any other
organizational units. Purchasing groups are defined at the client level and can create
purchasing documents for any purchasing organization.

[bharatrekhara]

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