SAP MM Organization Structure

To run an organization smoothly It’s mandatory to record the structure of organization. It can be
in the form of recorded used materials, procurement activity, profit, and loss of an organization.

Organizational levels in SAP Material Management:

There are different organizational levels in SAP MM Module suppose You want to run a
business Your business will have different levels like the client occupies the topmost position in
the organizational level in SAP MM Module and the client will have a different company code.
The company code may have different plants, the plants in SAP MM has storage location, the
storage may have different organization and at last, the organization may have different
purchasing groups. let understand this in a chart.

Client:
The client occupies the top position in the organizational level of SAP MM Module. It is
considered as a synonym to the group. The client contains several company codes. A client is a
commercial unit in SAP MM. It creates its own set of master data. The Data maintained in
client is valid for all the levels that occur in the organizational levels of SAP Material
Management.

Company Code:
Company code in SAP is an organizational unit, which is created in SAP FI (Finance) module
and at the same time, it is linked with SAP MM (Material Management). Within the client, the
Company code is an independent accounting group that represents its organization. Company
code maintains the records regarding profit, loss of an organization. It is the smallest account of
an organization.

Plant:
A Plant is an organizational unit of a company where different activities take place. It produces
the goods for the company. The plant looks after the stored material of a company. Plant in SAP
MM is helpful in manufacturing the goods. It has a warehouse distribution center and a regional
sales office within logistics.

Storage Location:
The storage location is nothing but a place where stocks are kept physically. A Plant consists of
many storage locations within it. The storage location is a logistics unit assigned to the plant
where stocks are kept physically and where inventory takes place. The storage location can be
characterized based on its properties like Finished good storage location, raw material storage
location, Return Sale Storage location, Spare storage location, etc.

Purchasing Organization:
A Purchasing Organization under a company in SAP MM manages the procurement activity of a
company based on requirements. It also manages the external procurement works of a company.
The Purchasing organization is also known as a centralized purchasing organization. There are
different forms of purchasing organization they are:

Centralized Purchasing:
Centralized Purchasing manages the procurement activity of all company codes which belong to
the different clients. It is not assigned to any company codes.

Company-Specific Purchasing:
The existing plant in a company code purchases the materials through this purchasing
organization. It is not assigned to all the company codes.

Plant Specific Purchasing:

Plant Specific Purchasing is assigned to a plant. Here only the specific plant can manage the
purchasing activity of the company through this purchasing organization.

Purchasing Group:
Purchasing Group manages the daily procurement activity of a company. A buyer or a group of
buyers run this procurement activity in Purchasing Organization.

Define Company in SAP

About Company in SAP:- Company is the organizational unit for which individual financial
statements can be drawn according to the relevant commercial law. A company can consist one
or more company codes. A Company has local currencies in which its transactions are recorded.
All company codes within a company must use the same transaction Chart of accounts and the
same Fiscal Year. The creation of a company in sap is optional.

Company in SAP – Important points

You can generate financial statements as per the legal requirements of the country, where the
company is located.
You can assign one or more company code to the company
It is an optional organization unit in SAP
If a company consists of more than one company code, then all the company codes should use
the same chart of accounts.
Path to Define Company in SAP:-

SAP IMG Path: – SPRO –> Implementation Guide for R/3 Customizing (IMG) –> Enterprise
Structure –> Definition –> Financial Accounting –> Define Company
Transaction code to “Define Company in SAP”:- OX15

Step 1:-  Enter Transaction Code “SPRO” in the commend field and press enter
on the Keyboard

Step 2:- Next customizing execute project screen select “SAP Reference IMG”
Step 3 :- After Selecting SAP Reference IMG, a new screen IMG Path with structure will
be displayed. Select Define company execute icon for creating a new company in SAP

The next Screen will be displayed after selecting the define company to execute icon

Step 4:– Now Select the New entries icon to create a new company and enter
the company details
The following details are to be entered for creating a new company
Enter 6 character alphanumeric code key that represents the group of company
Enter name of your company.
In the Detailed information update the address – Street name, PO Box#, Postal code, City.
Enter Country Code of the company
Enter language key
Enter local currency for the company (also known as Company code currency)
Click on Save icon or CTRL+S after updating the required information
Choose the Customizing request from the drop down list or create new one. To create new
Customizing request, click on create request icon as shown below image.
Update the required details like description of customizing request number and click on save
icon to save the configured data.

……………………………………………………………………………………………………………….

The company in SAP HANA is the highest level of the organizational unit and is used to
consolidate multiple company codes information to generate financial statements.
Company in SAP S/4Hana – Scenarios
1. It is an optional organization unit in SAP HANA and the highest organizational unit of
enterprise structure
2. The company is used to generate consolidation of reports and financial statements.
3. The company can be assigned to one or more company codes
4. To generate financial statements at the company level, company codes should be assigned to
Company

How to define a company in SAP HANA

You can define a company in SAP HANA by using the following configuration steps
 Menu Path: Enterprise Structure -> Definition -> Define Company Code
 Transaction Code: OX15
Step 1: From the SAP Easy Access screen, enter SAP transaction code “OX15” in the SAP Hana
command field and press enter to continue.

Step 2: On the change view international trading partners screen, display a list of defined
companies in the SAP S/4Hana system. As it is a demo system of S/4Hana, it consists of a
number of company entries. In real-time scenarios, an organization can consist of one company
for consolidation reporting purposes.
To create a new company in SAP S/4Hana, click on the option “New Entries”

Step 3: On new entries of the Company screen, update the following details
Company: Enter the new key that defines the company in the SAP Hana system
Company name: Enter the name of the company
Company name 2: Enter the company name 2
Detailed Information
Street: Update the street address details of the company
PO Box: Update the PO Box number
Postal code: Update post code
City: Update the city name
Country: Update the country key, where the company is located
Language Key: Update the language key
Currency: Update the company currency key.

After maintaining all the required details for the company, choose the save icon to save the
configured details in SAP S4Hana System.
Step 4: Now you are prompt for customizing the request number, click on create icon and enter
the required details for customizing the request and click on the save icon to save the details.
Now press enter and save the configured details.

Successfully we have created a new company in the SAP S/4 Hana system
……………………………………………………………………………………………………

Define Company Code in SAP

About Company Code:– Company Code in SAP is the smallest organizational unit of Financial
Accounting for which you draw individual financial statements like Balance Sheet and Profit &
Loss Account for purpose of external reporting. The Creation of company code in sap is
mandatory.

Company code in SAP – Important points

At least one company code must be defined in an SAP system to implement SAP FI – Financial
accounting module in SAP.
Company code must be implemented in SAP system as per tax law, commercial law.
Company code is used for an external accounting systems to general statements.
PATH:- IMG Reference –> Enterprise Structure –> Definition –> Financial Accounting –> Edit,
Copy, Delete Company Code
Transaction code to Define company Code in SAP:- OX02
Steps to Define Company Code: –
Step 1:-  Enter Transaction Code SPRO in the commend field and press enter

Steps 2:-  In customizing execute project screen select SAP Reference

IMG

Step 3:- In the next screen select Edit, Copy, Delete check Company Code
Step 4:- The below screen displays after selecting Edit, Copy, Delete Company Code
( Define Company Code )

we can create company code by selecting the above two options. By selecting
the first option copy, Delete, company code all the configuration and
tables get copied automatically along with assignments.
Here we are creating company code manually configure all the assignments by
selecting the second option Edit Company Code Data. Double click on Edit
Company Code Data

Step 5:- Click on New Entries  and update the following details
1. Update new Company code key AD06
2. Give the company name Adarsh Technologies for identifying the company
code key
3. In Additional Data update the details of City, Country, local Currency of
company, Language.
After updating Address enter Click on the Save icon   Thus the company
code AD06 is created in SAP.
……………………………………………………………………………………………………………….

All the organizational units combined together form the framework of a company. These
organizational units can be considered as different levels that describe the structure of
an enterprise. Every level has a particular functionality associated with it. Also, every
level in one or the other way is related to each other. These levels are placed according
to some hierarchy, Company being at the top.
To establish a relationship between these levels, we have to assign them to one or
other in such a way that they still lie in the same hierarchy. For example: As Company is
at the top level and plant is below it, it is necessary that the plant has some relation with
the company. As the plant is a sub-part or a smaller division of the company, it will be
assigned to the company. A standard SAP has the following four basic and essential
assignments −

 Plant to company code

 Purchasing organization to company code
 Purchasing organization to plant
 Standard purchasing organization to plant
All the assignments in SAP are done through the Display IMG screen, as shown in the
following screenshot.
Path to Reach Assignment − IMG ⇒ Enterprise Structure ⇒ Assignment
Plant to Company Code
Plant is one level below the company code. So, we need to assign a plant to a company
code. Follow the steps given below to assign a plant to a company code −
Path to assign plant to company code
IMG ⇒ Enterprise Structure ⇒ Assignment ⇒ Assign Plant to Company Code
TCode: OX18
Step 1 − On the Display IMG screen, select Assign plant to company code execute
icon, by following the above path.
Step 2 − Click the New Entries icon.
Step 3 − Enter the name of the plant and company code. Click the Save button. Plant is
now assigned to company code.
Purchasing Organization to Company Code
A purchasing organization can be set at company code level; it is called a centralized
purchasing organization. So we need to assign this purchasing organization to the
company code. The following steps take you through the procedure of assigning a
purchasing organization to a company code −
Path to assign purchasing organization to company code
IMG ⇒ Enterprise Structure ⇒ Assignment ⇒ Materials Management ⇒ Assign
Purchasing Organization to Company Code
TCode: OX01
Step 1 − On the Display IMG screen, select Assign Purchasing Organization to
Company Code execute icon, by following the above path.

Step 2 − We can view an existing assignment and can change it accordingly. Click the
Save button after making changes. Purchasing organization is now assigned to the
company code.
Purchasing Organization to Plant
A purchasing organization can be plant specific, i.e., it can be set at the plant level. In
such cases, we need to assign the purchasing organization to a plant. Follow the steps
given below to assign a purchasing organization to a plant −
Path to assign purchasing organization to plant
IMG ⇒ Enterprise Structure ⇒ Assignment ⇒ Materials Management ⇒ Assign
Purchasing organization to Plant
TCode: OX17
Step 1 − On the Display IMG screen, select Assign Purchasing Organization to Plant,
by following the above path.
Step 2 − Click the New Entries button.
Step 3 − Enter the name of the plant and the purchasing organization. Click the Save
button. Purchasing organization is now assigned to plant.
Standard Purchasing Organization to Plant
Standard purchasing organization is the default purchasing organization. We can
sometimes assign the standard purchasing organization to some specific plant if we
want to have the default purchasing organization for that plant. Follow the steps given
below to assign the standard purchasing organization to a plant −
Path to assign standard purchasing organization to plant
IMG ⇒ Enterprise Structure ⇒ Assignment ⇒ Materials Management ⇒ Assign
Standard Purchasing Organization to Plant
TCode: SPRO
Step 1 − On the Display IMG screen, select Assign Standard Purchasing Organization
to Plant, by following the above path.

Step 2 − We can view the existing assignment and can change it accordingly. Click the
Save button after making changes. Standard purchasing organization is now assigned
to plant.