Enterprise Structure

Ver Authored by Changes Date Reviewer Date

U1 Vimal Kumar, JKT New document 09/06/08
www.jktech.com
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Index
1. INTRODUCTION TO ENTERPRISE STRUCTURE...........................................................................3
2. ABBREVIATIONS.....................................................................................................................................3
3. COMPANY CODE.....................................................................................................................................3
4. CONFIGURATION OF SD.......................................................................................................................3
Sales Organisation...................................................................................................................................4
Distribution Channel................................................................................................................................4
Division....................................................................................................................................................5
Sales Area.................................................................................................................................................5
5. CONFIGURATION OF MM....................................................................................................................5
Purchase Organisation............................................................................................................................6
Purchase Group.......................................................................................................................................6
Plant.........................................................................................................................................................6
Storage Location......................................................................................................................................6
Shipping Point..........................................................................................................................................7
6. CONFIGURATION OF WM....................................................................................................................7
Warehouse................................................................................................................................................7
Storage Type.............................................................................................................................................8
Storage Section.........................................................................................................................................8
Storage Bin...............................................................................................................................................8
Quant........................................................................................................................................................9
7. SUMMARY.................................................................................................................................................9

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1. Introduction to Enterprise Structure

Enterprise structure represents the definition and mapping of basic organisational
elements in SAP. Enterprise structure is available for all modules of SAP like SD, MM,
WM, PP, FICO, etc. Organisation elements are the base units that control
transactions. Interlinking the enterprise structure of each module presents the entire
system.

Let us get into the basic configuration of O2C (order to cash module). Maintaining
values and set of rules for each element in the enterprise structure is called
configuration.

2. Abbreviations
SD – Sales and Distribution
MM – Materials Management
WM – Warehouse Management
FICO – Financials and Controlling

3. Company Code
The highest point of enterprise structure in O2C is company code. A company is an
organisational unit in accounting which represents a business organisation according
to the requirements of commercial law in a particular country. Company code is the
topmost element in enterprise structure where all the financial accounting is reported
to. The element belongs to FICO module. This element can be related to Head Office
(HO), Mumbai for HUL.

HUL companies defined are H – Hindustan Unilever Ltd., I – Indexport Ltd, K –

Kimberley Clarke Ltd.

For our comfort, let us look into the basic configuration of the enterprise structure for
each of the modules separately and then the integration of each to form the
structure of O2C.

4. Configuration of SD
SD module in SAP is responsible for sales of goods to customers. The logistics
(network and transportation) is also included.

The hierarchy of SD module is as below

1. Sales Organisation
2. Distribution Channel
3. Division

Sales office and sales groups are not used in HUL. Shipment point is included as a
configurable item.

A graphical representation of a sample hierarchy is shown below

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H Company K
Code

HLL Sales Organisation KCL

ST GT MT Channel ST GT MT

ST SL SL Division ST SL SL

Sales Organisation
Sales organisational unit manages the company according to its sales requirements.
One sales organisation could be included in only one company code. It means, if a
sales organisation needs to be included in two company codes, then a new sales
organisation needs to be created. In HUL scenario, one company code is assigned to
only one sales organization

Sales organisation is considered as a business unit that takes care of all the sales
management like master maintenance, customer relations, sales order and planning,
logistic planning, stock accounting and banking activities.

Sl. Sales org Description

1 HLL HUL sales organisation
2 IEL Indexports sales organisation
3 KCL KCLL sales organisation

Distribution Channel
In HUL, it is the different methods in which sales is done to customers. There are
eleven different channels in HUL. One or more distribution channels are assigned to
one sales organisation. Same way, a distribution channel can be assigned to multiple
sales organisations.

Sl. Distribution Channel Description

1 CD CSD
2 CN Consignment Sale
3 CT Citadal
4 GT General Trade
5 KA Key Accounts
6 KK Kiosk
7 MT Modern Trade
8 NC Non-Citadal
9 OH Out of Home
10 RD Rural
11 ST Stock Transfer

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Division
Division is an organisational unit that differentiates whether the materials are sold or
transferred in a transaction. Any combination of sales organisation, distribution
channel and division can exist whereas in HUL scenario, distribution channel ST could
combine with division ST alone.

Sl. Division Description

1 SL Sales division
2 ST Stock transfer division
In sales division (SL), the stocks move out of the company (sold for money). These
transactions are financially relevant. In the case of stock transfer division (ST), the
stocks move within the company and do not have any financial impact. The stock is
moved between factories and depots.

Sales Area
One single combination of sales organisation, distribution channel and division is
called sales area. Sales area is used for setting business controls for transactions.

Some examples of role of sales area is found in

- Pricing: Value of the goods being sold
- Payment terms: How frequently the customer pays to company
- Taxes: The additional element of tax applicable to each bill
- Allocation and Delivery: Availability of materials for each sales order

For e.g., HLL -> ST -> ST, KCL -> GT -> SL

5. Configuration of MM
Materials management takes care of stocks and inventory accounting. System
accounts stock in IM (Inventory Management) and WM (Warehouse Management)
level. Ideally, both the stock should be the same. IM stock accounts the book stock,
i.e., the stock that should be present in the plant as per the material documents. WM
stock accounts the physically available stocks at the depot.

The enterprise structure of MM is as shown below (with respect to HUL)

Purchase Organisation

Purchasing Purchasing
Group 1 Group n

Shipping
Plant Point

Storage Storage
Location 1 Location n

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Purchase Organisation
Purchase organisation is comparable to sales organisation in SD. Any items bought
or transferred from one point to another is under the preview of the purchase
organisation. Generally, purchase organisations are used in vendor purchases. For
technical reasons, this needs to be used in stock transfers also.

In HUL, the purchase organisation is maintained as ULIP for depot operations. Only
for purchases or transfers between HUL and 2P factories, purchase organisation UL2P
should be used.

Purchase Group
Within purchase organisation, there could be multiple groups that take care of the
purchases/transfers. Groups are formed to handle specific purchases. For e.g.,
different groups could be formed to oversee the purchases of oils, and gases,
separately.

In HUL depots, purchase groups used are

• 020 – Stock Transfers
• FGI – Import STN

Plant
Plant is the most important part of MM structure around which the entire module is
built upon. The plant is a manufacturing or a storage plant. Plants account the stock
numerically and financially.

One company can have multiple plants and a plant can be assigned to only one
company code. For this reason, HUL has defined different codes for the same depot
depending on the company code. E.g., Hubli depot has HBLH, HBLI, HBLK plants.
These are logically different but geographically same.
• A plant can be assigned to several combinations of sales organization and
distribution channel.

Storage Location
A location allows a plant to be classified according to situation criteria. Storage
locations are not the physical but logical divisions of the plant. It is best described as
the state of the material stored.

The storage location does not specify the physical location of a material. A plant
contains multiple storage locations.

In HUL, the main storage locations are

Plant Storage Location Description

MDRH MDR1 Normal Storage
NBLO Non Batch managed storage
EXPR Expired Stock storage
9999 Interim Storage while conversion
CRD1 Cross Docking

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Shipping Point
The shipping point is defined as the starting point of shipping of stocks for sales and
transfers. It is the part of the company responsible for the type of shipping, the
necessary shipping materials and the means of transport. A shipping point can be
allocated to several plants.

A delivery is always initiated from exactly one shipping point. Thus, all items of a
delivery belong to one shipping point. The shipping point can be proposed
automatically during order processing depending on the plant, loading group and
shipping condition.

In HUL, many plants in the same depot are assigned to one shipping point. For e.g.,
plants HBLH, HBLI, HBLK are assigned to shipping point HBL.

6. Configuration of WM
Warehouse management represents the physical storage of the materials. The
following diagram shows the structure of WM with respect to MM.

Plant ABDH

Storage locations ABD1, 9999

ABD

RCK, SHF, OPN

A+, A, B, C for
racks (HPC/F&B)

A23-15-03 OR
A01,A02 etc

Warehouse
Warehouse is the physical storage area of the plant. It defines the boundaries within
which the stocks are stored. The value of the material stored does not have any
significance. This means that warehousing does not include the financial aspects of
the stocks stored.

A warehouse could contain multiple plants and respective storage locations.

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In HUL, multiple plants of the same depot along with the storage locations are
assigned one warehouse.

For e.g.,

Plant Storage Location Warehouse

HBLH NBLO, HBL1, EXPR, 9999 HBL
HBLI NBLO, HBL1, EXPR, 9999 HBL
HBLK NBLO, HBL1, EXPR, 9999 HBL
SECH NBLO, HBL1, EXPR, 9999, CRD1 SEC
SECI NBLO, HBL1, EXPR, 9999, CRD1 SEC

Storage Type
A warehouse number is divided into a number of storage types. A storage type is
defined on the basis of its spatial or organizational features (for example, high rack
storage area, bulk storage area, goods receipt area).

To aid the interface between inventory management of plants and warehouse

management of warehouses, interim or dynamic storage types are defined. E.g., 902
– Interim type for goods receipts, 999 – Interim type for stock differences.

In HUL, the storage types are defined on the basis of how the materials are stored
(mechanized or non-mechanised) and the structure of the different storage methods
available. The common storage types are OPN (open - two dimensional storage),
RCK (Racks, as if, huge shelves) and SHF (Shelf – reachable by human).

Storage Section
Within a storage type, a storage section is a series of storage bins with common
features. Every storage type has a storage section. This is applicable even in case of
interim storage types.

Storage sections are grouped based on the material groups. In HUL mechanized
depots, storage sections are used for determining the fast moving stocks. The fast
moving stocks are kept near the door so that they can be accessed quickly. For e.g.,
storage type DT+ is nearer to the door whereas DTC is farther away. In case of non-
mechanised depots, the sections are defined on the basis of business. For e.g., HPC
for HPC items, F&B for foods and beverages.

Storage Bin
Bin is the smallest addressable unit of space in a warehouse. This is the physical
place where goods are kept.

In non-mechanised warehouses, bins are marked on the floor using paint markings.
The storage is on 2 dimension basis. In mechanized warehouses, the bins are the
box type spaces found in racks. Each space is a bin. The naming convention of a bin
depends on the layout of the racks. For e.g., Bin A01-01-2 depicts that in aisle A01,
01 is the column and 2 is the row.

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Quant
Quant is the logical division of bins to identify the uniqueness of a material stored in
the bins. Let us say that there is a material stored in the bin with two different prices
(through batch – part of masters). The system automatically creates two separate
quants for the specific bin.

A pictorial representation of storage types, storage sections and bins are shown in
the picture below.

Storage
Type ‘RCK’

7. Summary
1. Company Code
2. Configuration of SD
2.1 Sales Organisation
2.2 Distribution Channel
2.3 Division
2.4 Concept of Sales
3. Configuration of MM
3.1 Purchase Organisation
3.2 Purchase group
3.3 Plant
3.4 Storage location
3.5 Shipping Point
4. Configuration of WM
4.1 Warehouse
4.2 Storage type
4.3 Storage section
4.4 Bin

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4.5 Quant

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