Overview of Organizational Units in Procurement and Inventory Management
Organizational units in the SAP system represent the country-specific structure of a company. In other words, they correspond to an enterprise's glegal and/or orgtanizational units. SAP provides organizational units for all areas of your company (such as accounting, purchasing, production, inventory management, and warehousing). We will focus on the elements that are relevant for purchasing and inventory management. The organizational unit Purchasing Organization is used exclusively in purchasing processes. Other organizational units, such as the Company Code or Plant, belong to other areas and are also used in additional processes, and not only in sourcing and procurement. The relationships of organizational units are defined and assigned in the Organizational Structure app which supports you with predefined entities and templates before activating any content. The organizational units that are relevant to sourcing and procurement are shown in the figure Relationships between Organizational Units in the Procurement Process.
Explanation of Organizational Units in the Procurement Process
| Organizational Level | Explanation |
|---|---|
| Company | A company is an organizational unit in accounting that represents a business organization according to the requirements of the commercial law in a particular country. |
| Company Code | The company code is an organizational unit used in accounting. It is used to structure the business organization from a financial accounting perspective. A company code is defined in the system with a 4-digit alphanumeric ID. |
| Plant | The plant is an organizational unit within logistics that subdivides an enterprise from the viewpoints of production, procurement, plant maintenance, and materials planning. A plant is defined in the system with a 4-digit alphanumeric ID. A plant may represent a variety of entities within a firm, such as:
|
| Storage Location | The storage location is an organizational unit that facilitates the differentiation of stocks of materials within a plant. Inventory management on a quantity basis is carried out in the plant at the storage location level. The physical inventory is also carried out at this level. A storage location is defined by a four-character alphanumeric ID and it belongs to only one plant. |
| Purchasing Organization | A purchasing organization is an organizational unit that subdivides the enterprise according to the purchasing requirements. A purchasing organization procures materials or services, negotiates purchasing conditions with suppliers, and assumes responsibility for these transactions. A purchasing organization is defined in the system with a 4-digit alphanumeric ID. |
Adapting Your Organizational Structure
In the next lesson, you will learn how to define the relationships and integrate purchase organizations into the organizational structure of your company. Before that, check the following tutorials to learn how to create organizational units using Manage Your Solution and SAP Central Business Configuration (SAP CBC).
In the following tutorial you will learn how to change the name of the organizational units, and create new ones using the Configure Your Solution app of Manage Your Solution.
In the following tutorial you will learn how to create organizational units and assign the new shipping point to the new plant using SAP CBC. In this tutorial the backend system is a Development System environment in the organizational structure setup phase.