Why should we define Organizational structures in SAP?

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In the SAP R/3 System you can use several structures to represent the legal and organizational structure of your company. You can structure from the point of view of accounting, materials management, and sales and distribution. It is possible to combine these structures. The organizational structures form a framework in which all business transactions can be processed.

Organizational structures must be defined in SAP to represent the structure of the organization. These structures can be defined independently for each functional area of the system. For example, the sales department will want to define sales organizations, distribution channels and divisions (product groups), while the purchasing department will want to define purchasing organizations, plants and storage locations. Independent of these structures, a structure must be defined in financial accounting (FI) that represents the legal reporting entity. This structure is represented by the company code. The balance sheet and the profit and loss statement are prepared for the company code.

Functional areas and organizational structures include:

Functional area Organizational structure

Sales and distribution -> Sales organization, distribution channel, division, sales area, …

Financial accounting -> Company code, chart of accounts, business area, …

Logistics -> Purchasing organization, purchasing group, plant, storage location,…

Controlling -> Controlling area, cost centre, profit centre, …

Human resources -> Personnel area, employee group, employee subgroup, …

General data that is used by all company codes is stored at a client level. This means that data valid for all functional areas needs to be stored only once (eg vendor name and address is stored at the client level whilst payment terms may vary for each company code).

Organizational structures can be used to control access to processing within the organization. For example, users can be restricted to process documents for their own company code only.