Organization Structure

Organization Structure – Significance & Impacts Standard SAP Organization StructureProposed Organization Structure – FI/COProposed Organization Structure – Logistics (MM,SD & MM)

Agenda

Significance of Defining Organization Structure

Definition of organizational Structure is a fundamental & Mandatory step

Mapping the current Organizational. structure to ERP Organization levels.Structure definition is backbone of Implementation.

Once defined Changes in Structure is a very difficult process.

It is a Critical factor from Change Management perspective.

Impact of defining Organization Structure

Levels of Legal and Managerial Reporting

Levels of Data Management (Transactional Data)

Levels of Authorization Control

Defines route of Information flow (top - down / bottom – up)

Defines rules for Automatic Account Posting

Levels of Inventory valuation / Product Costing

ERP Organization Structure• Operating Concern• Controlling Area• Chart of Accounts• Company• Company Code• Profit Center Hierarchy• Cost Center Hierarchy• Credit Control Area• Plant• Storage Location• Purchasing Organization• Purchasing Groups• Sales Organization• Distribution Channel• Division• Sales Area• Sales Office• Sales Group

Sales Area

Client

CompanyOperating Concern

Credit Control Area

Chart of Accounts

Controlling Area

Company Code

Cost Center

Profit Center

Sales Organization

Distribution Channel

Division

Sales Office

Sales Group

Plant

Storage Location

Purchasing Organization

PurchasingGroup

Organization – Finance & Controlling

•Operating concern – Organization Object to analyze the profitability market segment wise. The Characteristics and Value Fields will be defined and assigned to this Operating Concern. The Profitability Segments will be defined, at which the profitability can be seen.

• Controlling Area–Hierarchical structure to represent the organization according to the cost incurrence. The Cost Center Standard Hierarchy and Profit Center Standard Hierarchy will be defined and assigned to this Controlling Area.

Chart of Accounts - It is a list of G/L accounts used by one or more company codes. Can be attached to many company codes.

Company Code - is the organizational unit that allows you to structure your enterprise from a financial accounting perspective.

Segments Definition

Segments are used for reporting from external market viewpoint. As such, segment does not have any relationship with normal Org. Structure

Segments are defined with a concept of product category level.

Common Segment is defined to book expenses which cannot directly be assigned to a particular segment.

7

Chips IN

POY IN FDY IN

Trading Power Lease

Common PTY

INDIA KOREAChips KR POY KR FDY KR

ITY KR Common Trading

Mauritius

Common

Singapore

Common

Power Rent

Common

SSYPL

Profit Centre Hierarchy

Each segment will have one to many relationship with profit Center.

Profit centers are grouped under Profit Center Group.

Profit center hierarchy is created, which represents organization in accordance to revenue and cost incurrence.

Profit center is a basic object were cost and revenue are collected and reported.

Cost Centre Hierarchy

Cost center hierarchy is created, which represents organization in accordance to cost incurrence.

Cost center are basic objects where cost is collected and reported.

Cost Centers can be grouped under cost center group.

Cost Center (Concept)

ORG(1000)

Corporate Office

Finance and Accounts

HR & Admin

Sales & Distribution

Purchase

Common

ORG(2000)

Corporate Office

Finance and Accounts

HR & Admin

Sales & Distribution

Purchase

Common

Logistics Organization Structure

Org. Business Overview

Inventory valuation of Materials may be different at different Plant (Units)Each Manufacturing Plant (Unit) has

General Raw Material Stores Production Staging Area (Stores) Finished Goods Stores Consumables Stores Packaging Stores Spare stores

Inventory Management (Goods Movement such as Receipt , Issue, Delivery etc) takes place at all above Stores

Physical Inventory is carried out at all above StoresPurchasing and Inventory Reporting and Analysis is based Unit wise/Location wise/Material wise/Purchasing Dept wise

Slide 12

Org.Business Overview

Slide 13

Planning of Materials is/will be done By Production Dept of each Unit based on Made-to-Stock concept.Planning of Trading Material is based on Customers/Market requirement. Maintenance Activity is done in each Manufacturing Unit.Procurement for Materials required for In-house Manufacturing /Services is done by Purchase dept at At Mumbai/Delhi Domestic and ImportLocal Common Purchase Dept for all UnitsPurchase Dept atProcurement for Trading Materials is done from Mumbai office.Currently distinct Purchase groups within ach Purchase dept is not operational.Proposed Purchasing Groups will be Dept Specific and/or Material Specific.

MM Organization Structure

Org. 1

Raw Material for PTY

Packaging

Consumables

Spares

General

Scrap

Finished Goods PTY

SFG -PTY

Prod.Storage for RM-PTY

Org 2

Raw Material for PTY

Packaging

Consumables

Spare

General

Scrap

Finished Goods PTY

SFG - PTY

Prod. Storage for RM - PTY

Slide 15

OrgRaw Material for POY/FDY

Raw Material for Chips

Raw Material for Dyed Yarn

Raw Material for PTY

Raw Material for ITY

Packaging

Consumables

Spares

General

Scrap

Finished Goods - POY

Finished Goods - FDY

Finished Goods - CHIPS

Finished Goods - PTY

Finished Goods - ITY

Finished Goods - Dyed

SFG-Chips

SFG-FDY

SFG-Poy

SFG-PTY

SFG-ITY

SFG-Dyed

Production Storage for RM/Packing-FDY

Production Storage for RM/Packing-POY

Production Storage for RM/Packing-Chips

Production Storage for RM/Packing-PTY

Production Storage for RM/Packing-ITY

Production Storage for RM/Packing-Dyed

Plan

t w

ith

Res

pect

ive

Stor

age

Loca

tion

Storage Location (Stock Monitoring & PI) as per category wise

Raw Material for POY/FDY Raw Material for Chips Raw Material for Dyed Yarn Raw Material for PTY Raw Material for ITY

Packaging Consumables Spares General Scrap Finished Goods - POY Finished Goods - FDY Finished Goods - CHIPS Finished Goods - PTY Finished Goods - ITY Finished Goods - Dyed

SFG-Chips SFG-FDY SFG-POY SFG-PTY SFG-ITY SFG-Dyed Production Storage for RM/Packing-FDY Production Storage for RM/Packing-POY Production Storage for RM/Packing-Chips Production Storage for RM/Packing-PTY Production Storage for RM/Packing-ITY Production Storage for RM/Packing-Dyed

Purchasing Organization Specification Organizational Unit within Logistics that sub divides an

enterprise according to purchasing requirement.

Purchasing Organization negotiates Terms and Conditions with Vendors and Assumes responsibility for such Business with Vendors.

Responsibility and Master Data

1. Each Purchasing Organization has its own Vendor Master Data (Purchasing Data)

Purchasing Organization Specification

Responsibility and Master Data

1. Each Purchasing Organization has its separate Vendor Evaluation

2. Purchasing Organization is highest Summarization level for Purchasing Statistics after Client

3. All items of Purchasing Document (RFQ,PO Contract) are assigned to respective (only one) Purchasing Organization

4. Approval strategy can be defined based on Purchasing Org.

5. Purchasing Organization serves selection criteria for list of all purchasing document

Sales & DistributionOrganization Structure

Sales Organization: • An organizational unit that sells and distribute products, negotiates term of sales and is responsible for all sales related transactions.

• Sales organization is assigned to only one company code.

• All Reports, Authorizations, products, pricing, Master data and transactions will be separated at the level of Sales Organization.

Distribution Channel:

• The channel through which the products reach customers.

• Can be assigned to one or more sales organizations.

• In case of Some organization , Distribution channels have been divided in to

“Domestic”, “Exports Sales” and “Stock transfer” within the org Plants.

Division

• Represents the range of products.

• Can be assigned to one or more sales organizations.

• Each time a new range of product is introduced a division will have to be

created.

Sales Area: A combination of Sales Organization, Distribution Channel and Division. It is

mainly used for reporting purposes. All data relevant for sales can defined per sales area.

Sales Office:• Sales Office represents the various sales team’s locations or office branches.• It can be assigned to more than one sales area. • It is an optional organizational unit in ERP .

Organization

Domestic Sales

Domestic-Dealer

Domestic-Broker

Export Sales

Export-Dealer

Intercompany

Stock Transfer

Domestic Trading

Export Trading

Plant Maintenance – maps the maintenance activities in the Plants.

Organization Structure developed on the FI-CO, PP and MM.

Maintenance Plant – plant where technical objects exist and where maintenance activity can be done.

Maintenance Planning Plant – plant where Maintenance Planning is done for the technical objects of the maintenance plant(s).

Thank You