Let’s go over the organizational structure which is a key SAP configuration element & how it relates to master data. In this article we will explore the following topics:
- SAP Organization Structure & Relation to SAP S4 Master Data
- SAP Organizational Structures relevant for MDM & Configuration Location
- Overview of Master Data Objects & Their Organizational Structures
SAP Organization Structure & Relation to SAP S4 Master Data
There are a lot of overviews out there of SAP’s organization structure that can get quite complex. Either you get a holistic view of SAP org structure on a never ending enormous chart or you have a per functional area view of org structure. My goal in this article is to call out just what you need to know related to SAP org structure to manage master data as not all of the org structure relates to master data.
So what is an organizational structure in SAP S4 HANA first of all? SAP maps a global enterprise into what is called an organizational structure. The goal of this structure is to realistically map a companies key areas such as:
- Different legal entities (a global organization has to have a different legal entity per country of operations)
- Different sales organizations (global companies usually have different sales teams with different revenue targets by country at a minimum and are usually broken down further)
- Each locations where products are either manufactured or stored (distribution centers) are set up as an organizational structure in SAP
- Different purchasing organizations (global companies usually break down their purchasing departments either by country or globally by different business units/product lines)
What is the reason for mapping different areas of a business to organizational structures in SAP? There are a few different benefits and they vary by organizational structure but I will give some examples
- Each legal entity that gets set up in SAP S4 HANA allows financial reporting to be automatically carried out at these levels which is a legal requirement
- There can be security restrictions in the system by organizational element. So if you don’t want a user to be able to buy products for a purchasing organization that they are not a part of, it can be restricted
- Reporting overall in the system is easily broken up by organizational elements since for example every sales order requires a sales organization to be specified, for every purchase order a purchasing organization is required
- Data retention levels, here is a key point from a master data perspective. Usually for the same master data object you can have different data maintained by organizational level
- For a quick example: If you have the same customer that two business units of your organization sell to in the same country you can say for business unit 1 the payment term should be 30 days but for business unit 2 the payment term should be 60 days. We will get into more detail at the table level shortly
Okay now that you have the background let’s dive into the key organizational structures and which master data objects are impacted!
SAP Organizational Structures relevant for MDM & Configuration Location
- SAP Company Code – This is a 4 digit organizational data element that should represent the different legal entities within a company. Usually at a minimum there is one per country.
- Master Data Impacted: Business Partner Customer/Vendor. There can be data for a business partner customer or vendor that is at the company code level. Meaning for each legal entity that is relevant for a specific business partner customer/vendor you first need to link that company code to the customer (called extending in SAP) then you can store data that is specific to the combination of that customer and that legal entity (financial data).
Let’s create a sample company tech consulting hub that has operations in the US and Canada. An example of the organizational data in SAP for this companies company codes would be as follows:
| Company Code | Company Code Name |
|---|---|
| 1000 | US Division of Tech Consulting Hub |
| 1010 | Canada Division of Tech Consulting Hub |
- SAP Sales Area – The SAP sales area is an organizational unit that comprises of Sales Organization (a 4 digit code), Distribution Channel (a 2 digit code) & Division (a 2 digit code). Divisions & Distribution channels are assigned to sales organizations. Eventually there is an overall combination of valid sales org, distribution channel, division that can be selected in transactional screens.
- Sales Organization – This is supposed to represent the entire corporate function of sales. Usually this is one to one with company codes unless there is a truly globalized sales organization/customer service that works across the globe
- Distribution Channel – This represents within a sales organization the various methods that a product reaches the consumer. Examples could be Wholesale vs ECOM, or Wholesale vs Retail for example
- Division – Division represents a break up of product line. In the case of some sales structures there are different types of products that are grouped together in the same product division. For example: In a food company you could have beverages, meals, snacks etc.
- Master Data Impacted:
- Business partner customer can have data at the sales area level. For a customer to be used in a sales area it must be extended to a sales area. At the sales area level different data can be managed for the same customer. For example, in one sales area the default number of partial of deliveries can be 3 where in another sales area there can be no partial deliveries allowed.
- Material/Article Master is also impacted by sales area. Material can segregate data based on the sales organization/distribution channel level since materials are assigned to a division at the global level. This means an article can only have a single division but can be extended to more than one sales area with different data available for each sales area.
- Master Data Impacted:
After all this sales area config you end up with a table as follows. In my example the tech consulting hub company has two sales organizations Tech Consulting Hub US Sales & Tech Consulting Hub Canada Sales. The company has three distribution channels Wholesale/Online/Intercompany. The company has 2 divisions tech products & tech services. Let’s also say for example that in the Canada sales org there are only tech services available. An example of the organizational data in SAP for this companies sales area structure based on the above requirements would be as follows:
| Sales Org | Sales Org Description | Distribution Channel | Distribution Channel Description | Division | Division Description |
|---|---|---|---|---|---|
| 1000 | Tech Consulting Hub US Sales | 10 | Wholesale Sales | 10 | Tech Products |
| 1000 | Tech Consulting Hub US Sales | 10 | Wholesale Sales | 20 | Tech Services |
| 1000 | Tech Consulting Hub US Sales | 20 | Online Sales | 10 | Tech Products |
| 1000 | Tech Consulting Hub US Sales | 20 | Online Sales | 20 | Tech Services |
| 1000 | Tech Consulting Hub US Sales | 30 | Intercompany Sales | 10 | Tech Products |
| 1000 | Tech Consulting Hub US Sales | 30 | Intercompany Sales | 20 | Tech Services |
| 1010 | Tech Consulting Hub Canada Sales | 10 | Wholesale Sale | 20 | Tech Services |
| 1010 | Tech Consulting Hub Canada Sales | 20 | Online Sales | 20 | Tech Services |
| 1010 | Tech Consulting Hub Canada Sales | 30 | Intercompany Sales | 20 | Tech Services |
- Purchasing Organization: This is a 4 digit element that breaks a company into segregated organizations for purchasing. This can typically be one to one with company code but more often companies have a truly centralized purchasing organization that spans all legal entities that is split up by business unit or type of purchasing for example.
- Master Data Impacted: Business Partner Vendor can have data stored at the purchasing organization level. As a similar example there can be a payment terms of 30 days in one purchasing organization and 60 days in another. In order for a vendor to be used in a purchase order the vendor must be extended to the relevant purchasing organization in master data
We will have an example where there is a purchasing organization per country in the tech consulting hub company resulting in the below example:
| Purchasing Organization | Purchasing Organization Description |
|---|---|
| 1000 | Tech Consulting Hub US Purchasing |
| 1010 | Tech Consulting Hub Canada Purchasing |
- Plant Organizational Level: A plant in a company is a location in which goods are typically stored or manufactured. Examples are distribution centers, stores & manufacturing facilities. The plant is a 4 digit code stored in SAP.
- Master Data Impacted: The material/article master is the key object that stores data at the plant level. In this case an example is that the stock reorder quantity can vary by plant. This way for the same article in one plant if stock drops below a 50 units there can be an automatic purchase order where in another plant it reorders at 100 units
Let’s say for example that in the Tech Consulting Hub Company there are two distribution centers in the US & one in Canada. In that case an example of the organizational data in SAP for this companies plant data would be as follows:
| Plant | Plant Description |
|---|---|
| 1000 | East Coast DC US |
| 1010 | West Coast DC US |
| 1020 | Canada DC |
Overview of Master Data Objects & Their Organizational Structures
Now that we have a background of organizational structures let’s do a quick mapping of the key master data objects and the organizational levels. In master data it is called extending a data record when an object is included for an organizational level. Extensions are required to perform transactions such as sales orders or purchase orders.
Business Partner Customer
- Global Organizational Level (This is simply the lack of org structure, this data assumes data is relevant throughout SAP)
- Sales Area Level – A subset of data that is relevant for a combination of customer and sales area
- Company Code Level – A subset of data that is relevant for a combination of customer and company code
Business Partner Vendor
- Global Organizational Level (This is simply the lack of org structure, this data assumes data is relevant throughout SAP)
- Purchasing Organization Level – A subset of data that is relevant for a combination of vendor and purchasing organization
- Company Code Level – A subset of data that is relevant for a combination of vendor and company code
Material/Article Master
- Global Organizational Level (This is simply the lack of org structure, this data assumes data is relevant throughout SAP)
- Sales Area Level – A subset of data that is relevant for a combination of material and sales area (with exclusion of division)
- Plant Data Level – A subset of data that is relevant for a combination of material and plant
- Storage Location – Within a plant data can be stored at different storage locations
- Quality Management Level – Within a plant there can be different inspection types where data can be stored
- Warehouse Level – If a material will need to use the warehousing functions of SAP there is a warehouse level that stores this information
- Accounting Level – In general this view is synonymous with the plant level view since most companies have their valuation data set at plant level but it can vary
I hope this has helped provided an overview of the SAP organization structures that are utilized for master data in SAP S4 HANA. If this blog helped you please consider subscribing below to get the latest information. If you have any additional clarifying questions or would like additional information feel free to leave a comment below. As a next step if you want to learn about the key master data tables that make up the core master data objects check out the link below:
https://techconsultinghub.com/2022/09/09/sap-s4-master-data-key-objects-tables/