Explaining Organizational Structures


After completing this lesson, you will be able to:

  • Map the organizational structures of the enterprise

Organizational Structures

Position of the Topic in the Complete Training Scenario


You want to implement SA S/4HANA Fashion in your enterprise. First, you familiarize yourself with the retailing terminology used by SAP.

Then, you learn how the organizational structures are used. You map the individual parts of your company (e.g. accounting, purchasing, sales).

Organizational Structures - Definitions

The following are definitions of the most important objects within organizational structures:

Company code

A company code is an independent accounting unit that represents an independent company in the legal sense.

Purchasing Organization

Organizational unit which procures Materials and negotiates purchase price conditions with vendors.

Sales Organization

The sales organization is responsible for distributing goods/ services and responsible for negotiating of sales conditions.

Distribution Channel

The distribution channel is the channel through which saleable Materials reach the customer.


A plant is a distribution center or a store.

Mapping the Different Elements

A distribution center (DC) has to be assigned to a distribution chain.

A store is always assigned to a specific distribution chain and may be supplied by distribution centers via several distribution chains.

When assigning plants to distribution chains, differentiate between:

  • The organizational assignment in the plant master basic data view.
  • The distribution chain, which supplies a plant, in the plant master customer data.

Franchise partners can be set up as plant master data (for logistical purposes) and with a separate company code (for billing purposes).

It is possible to create different sales units and sales prices for a material in each distribution channel.

Organizational Structures in Purchasing

A purchasing organization procures merchandise for several stores and negotiates purchase conditions with vendors. This is the business unit legally responsible for all purchasing activities and acts as a data retention level for master data. A purchasing organization can (but does not have to) be assigned to a company code.

A purchasing group is similar to a purchasing department in that it consists of one or more buyers. Purchasing groups are responsible for maintaining master data and control data, and for local purchasing operations. Purchasing groups are not data retention levels; they are used as a selection criterion, as a level at which analyses can take place and at which authorizations can be stored.

Organizational Structures in Sales

A sales organization is legally responsible for sales in your company and is therefore responsible for product liability and any recourse claims from customers. Sales organizations allow you to divide your market into regions. Business transactions in sales and distribution are always processed in a sales organization. In order to best serve the market, your sales and distribution department uses different distribution channels. Possible distribution channels include sales to the consumer through chains of stores, wholesale outlets, or by mail order.

Distribution channels are assigned to sales organizations.

A distribution Channel is the part of the organizational structure that indicates company strategy for goods distribution. Distribution Channel is mainly defined for defining different types of sales in a sales organization. You can define distribution channels such as store sales, internet sales and sales through wholesale.

A division can be used to represent e.g. product ranges. Divisions are not used for functions developed specifically for SAP Retail. However, a single default division is provided where necessary (e.g. plant master data, material master data).

A distribution chain is a combination of a sales organization and a distribution channel.

A sales area is the combination of a distribution chain (a sales organization and a distribution channel) and a division.

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