organization structure workshop

SAP AG 2002, AcceleratedSAP, Title, Speaker Name 1

GOAL OF ORGANIZATION STRUCTURE WORKSHOP

Obtain an Understanding of the Customer’s Key Business Processes

Define the Client’s Organization Structure in SAP based on those Business Processes


AGENDA - Session 1

Customer High Level Business Overview

Customer Visions and Goals

Business Process Review

External Accounting Legal Entity Sales Logistics Procurement, Logistics Planning

Financial/Asset Management

Integrated Business Process Overview


AGENDA - Session 2

Define the Organizational Elements in SAP based on the Company’s Business Processes and Reporting Requirements obtained in Session 1

Document the Company’s SAP Organization Structure

Defintion of Organization Structure


Company’s Mission Statement

Markets

Customer Base

Products and Services

SAP Implementation Drivers

Business Overview

Integrated Business Process Review


What are the legal entities that constitute your business?

Do you produce legal financial statements for each one of these legal entites and do they have separate Federal Id Numbers?

Which one of these entities are true operating companies

Of these legal entities, which ones are Holding Companies?

How do these legal entities relate to each other?

Legal Entity Structure

Integrated Business Process OverviewIntegrated Business Process Overview


Integrated Business Processes Overview

Finance / Asset ManagementFinance / Asset Management

ProcurementProcurement

Logistics PlanningLogistics Planning

Sales LogisticsSales Logistics

ProductionProduction



Sales Logistics

Inventory Sourcing

Inventory Sourcing DeliveryDelivery BillingBillingSales Order

Processing

Sales Order Processing

Pre-Sales Activities

Pre-Sales Activities

Financial and Managerial Reporting and AnalysisFinancial and Managerial Reporting and Analysis

G/L COS / Inventory

G/L COS / Inventory

AR Invoice /

GL Revenue

AR Invoice /

GL Revenue

Customer Payment

Customer Payment

FIFI

SDSD



Fore-cast

Fore-cast

Sales Oper Planning

Sales Oper Planning MPSMPS MRPMRP Order

Settlement

Order Settlement

CostingCosting

InventoryInventory

Manufacturing Execution

Manufacturing Execution

CapacityCapacity


Production


SDSD

FIFI


Requirement for Goods /

Services

Requirement for Goods /

Services

Purchase

Order

Purchase

Order

Goods

Receipt

Goods

Receipt

Invoice

Verification

Invoice

Verification


ProcurementProcurement

G/L Inventory /

GRIR

G/L Inventory /

GRIR

G/L GRIR/ Expense

AP Invoice

G/L GRIR/ Expense

AP Invoice

Vendor

Payment

Vendor

Payment

ACCOUNTSRECEIVABLE

ACCOUNTS PAYABLE

ASSETMANAGEMENT

COST CENTERACCOUNTING (CCA)

INTERNAL ORDER ACCOUNTING (OPA)

PROJECTACCOUNTING

PRODUCT COSTING

PROFIT CENTER ACCOUNTING (PCA)

PROFITABILITY ANALYSIS (PA)

FINANCIAL ACCOUNTING (FI / AM)

FINANCIAL REPORTING (FI)

MANAGEMENT REPORTING (CO)

GENERAL LEDGERNATURALACCOUNT

Finance Management /Accounting & Reporting

SD

MM


AGENDA - Session 2

Define the Organizational Elements in SAP based on the Company’s Business Processes and Reporting Requirements obtained in Session 1

Document the Company’s SAP Organization Structure

Defintion of Organization Structure


Session 2 - Organizational Structure Review

3000US #1

3000US #1

02Motorcycles

02Motorcycles

90Accessories

90Accessories

3000New York

3000New York

4000Seattle

4000Seattle

3000US Sales

3000US Sales

02Motorcycles

02Motorcycles

02Motorcycles

90Access.

90Access.

03Retail

90Assess.

BusinessArea

PurchasingOrganization

Division/Plant

DistributionChannel

Division

SalesOrganization

Organizational Structure

3000Motor Sports

International, Inc US

4000Motor Sports

International, IncCanada

4000Motor Sports


Motor Sports InternationalMotor Sports International



The Client

Organizational Elements -Client


Organizational Elements - Client

Highest Hierarchical Level in SAP(e.g. a corporation)

Can be Used to Differentiate between a Development, Quality Assurance, and Production System within R/3

All Areas of an Organization that are to be Integrated into the SAP R/3 Production System should be Included Under one Client

Client Characteritics


Organizational Elements - Client (Cont.)

Common Set of Rules Common Tables Common Master Files Common Data Bases

Standardized Data Across the Client a vendor number and name is common across the client a customer is common across the client a general ledger number and description is common across the

client a material number and description is common across the client

Client Characteritics


Organizational Elements - FI

Clients: Identify the proposed productive clients for customer being evaluated.

Benefits: Identify the benefits of recommended strategy.

Costs: Identify the costs of recommended strategy.

Issues: Identify any open issues/questions.

Client Strategy for Name of Customer



3000Motor Sports International, Inc

US(Company)


US(Company)


Canada(Company)


Canada(Company)

Company




Represents a legal/tax entity - Where do you legally represent the financial events of transacting business?

Arms Lenghts Transactions

Level of External Reporting or Legal Sets of Books

Company



A Company is Assigned to: Credit Management Area to allow for either Centralized or

Decentralized Credit Management(Credit Control Area) Financial Management Area-Treasury Departmental Accounting/Cost Center Area to allow for

Centralized or Decentralized Departmental Reporting(Controlling Area)

Company Assignment Considerations



Company Codes: Identify the proposed company codes if any for customer being evaluated.

Consolidation Company Codes: Identify the proposed consolidation company codes if applicable.

Benefits: Identify the benefits of recommended usage of company codes.

Costs: Identify the costs of recommended usage of company codes.


Companies for Name of Customer




US(Company)


US(Company)


Canada(Company)


Canada(Company)

Business Area


02Motorcycles

(business area)

02Motorcycles

(business area)

90Accessories

(business area)

90Accessories

(business area)



Subset of Companies

Used for Segment Reporting in Accordance to FAS 14

Represents a Separate Area of Operations or Responsibility within an Organization

Could be Shared Across Companies or Specific to a Single Company

Lowest Level within FI that an Internal Balance Sheet and Profit and Loss Statement can be Developed

Typically does not Have Shareholder Equity

Business Area



Business Area: Identify the proposed business area if any for customer being evaluated.

Benefits: Identify the benefits of recommended usage of business areas.

Costs: Identify the costs of recommended usage of business areas.

business areas are only in balance at the end of the period when the business area clearing program is executed.


Business Area for Name of Customer



There are Three Chart of Accounts Concepts in SAP Operating Chart of Accounts Country Chart of Accounts Group Chart of Accounts

Chart of Accounts



G/L Account Master Records Required in One or Several Company Codes

Postings are Made to these Accounts

Maximum of a 10 Digit Code

A company Must be Linked to One Operating Chart of Accounts

An Operating Chart of Accounts can be Linked to Many companies

Operating Chart of Accounts


Linking of Chart of Accounts to Company Codes


OPERATINGCHART OF ACCOUNTS

Motor SportsInternational, Inc. US

1

Company Codes are linked to Chart of Account1

Motor Sports International, Inc. CA

1



Represents the Account Structure Prescribed under National Regulations

Optinal Usage in SAP

Could be the Same as the Operating Chart of Accounts or the Operating Chart of Accounts at the Company Level can be linked(mapped) to the Country Chart of Account

Country Chart of Accounts



Could be used for: Consolidation Chart of Accounts Corporate Group Rollup

The Operating Chart of Accounts Master(not Company) is Assigned to a Corporate Chart of Accounts

Optional Usage in SAP

Group Chart of Accounts


Linking of Chart of Accounts to Company Codes


OPERATINGCHART OF ACCOUNTS

COMPANY CODE 1

1

Company Codes are linked to Chart of Account1

COMPANY CODE 2

1

The Operating Chart of Accounts is Linked to the Group Chart of Accounts

GROUPCHART OF ACCOUNTS

2

2



Different from a lot of other Financial System Applications in that the G/L account is strictly comprised of the natural account code.

The management reporting structures (i.e. cost centers, divisions, regions, and job orders) is not embedded within the chart of accounts.

In SAP there is a relative relationship between the chart of accounts profit and loss natural account code and the cost centers.

Operating Chart of Accounts = General Ledger


Organizational Elements - CO

02Motorcycles

02Motorcycles

90Accessories

90Accessories

BusinessArea

Controlling Area

3000Motor Sports

International, IncUS

3000Motor Sports


Company



ControllingArea

ControllingArea

4000Motor Sports


4000Motor Sports




An organizational unit within a corporation in which comprehensive independent management accounting can be performed.

Allows you to group companies from a Cost Accounting View.

It links the financial accounting module (FI) to the management accounting module(CO) in SAP.

Controlling Area



The Operating Chart of Accounts Links Financial Accounting(General Ledger) to Management Accounting in the following way:

A Company Code is Linked to the Operating Chart of Accounts The Controlling Area is Linked to the Operating Chart of Accounts A Company Code then can be Linked to any Controlling Area as

long as they are both Linked to the Same Operating Chart of Accounts

Several Companies can be Linked to a Single Controlling Area regardless of the Companies Functional Currency. AGAIN, THE ONLY REQUIREMENT IS THAT ALL COMPANIES WITHIN THE CONTROLLING AREA MUST USE THE SAME OPERATING CHART OF ACCOUNTS.

Linking of FI and CO



Highest Reporting Level under Cost Center Accounting across which Information can Shared and Viewed within the Controlling Module

Departmental Cost Information withing a Single Controlling Area can be Viewed using the Standard Cost Center Reports in CO.

Departmental Cost Information Across Controlling Areas can be viewed by Building User Definable Reports in the Special Ledger

Interdepartamental Cost Allocations can only be performed in CO across Companies in the Same Controlling Area.

Controlling Area



COA/Controlling Area: Identify the proposed COA/controlling area strategy(i.e. single v.s. multiple)

Benefits: Identify the benefits of recommended strategy.

Costs: Identify the costs of recommended strategy


Recommended Controlling Area & Chart of Accounts

Strategy for Name of Customer



02Motorcycles

02Motorcycles

90Accessories

90Accessories

BusinessArea

Profit Centers

3000Motor Sports


3000Motor Sports


Company



ControllingArea

ControllingArea

4000Motor Sports


4000Motor Sports


Profit Center HierarchyProfit Center Hierarchy

PaintPaint PumpsPumps



Used to Calculate the Profit of an Area of Responsibility within the Organization(e.g. Division)

The Areas of Responsibility(Profit Centers) could be Based on Regions, Functions, or Products.

Supports Calculating Operating Profit using the Cost of Goods Sold P/L Format and/or the Period Accounting Method

A Profit Center can also be Viewed as an Investment Center since it is Possible to Transfer at Period End the Balance Sheet Positions for Assets, WIP, AR, AP, and Inventory

Profit Center Accounting



A Profit Center is not an Independent Account Assignment Object at the Moment of Entering a Transaction in SD or MM;It is Derived from Existing Objects

As a Default, Revenue and Costs for Profit Centers are Derived as follows:

Sales Order Line Item based on the Product being Sold Direct Costs Based on the Assignment of Production Orders and

Direct Costs. The System Proposes the Profit Center Based on the Profit Center of the Material Being Produced.

Overhead Costs Based on the Assignment of the Cost Center or other Cost Object

Substitution Rules can be Used to Change the Default Derivation

Supports both Actual and Planned Data

Profit Center



Profit Centers: Identify the proposed profit centers if any for customer being evaluated.

Benefits: Identify the benefits of recommended usage of profit center.

Costs: Identify the costs of recommended usage of profit centers.


Profit Centers for Name of Customer



02Motorcycles

02Motorcycles

90Accessories

90Accessories

BusinessArea

Cost Centers

3000Motor Sports


3000Motor Sports


Company



ControllingArea

ControllingArea

4000Motor Sports


4000Motor Sports


Cost Center HierarchyCost Center Hierarchy

Sales - PaintsSales - Paints

Information Systems

Information Systems

Marketing

Profit Center HierarchyProfit Center Hierarchy

PaintsPaints PumpsPumps



Departmental Breakdown of your Legal Entity Structure

Lowest Level of Organization where you want to Collect and Analyze Costs/Departmental Performance

Departmental Budgets and Expense Analysis of P & L Accounts

Interdepartmental Cost Allocations

Each Cost Center is Assigned to a Company Code, Business Area and Profit Centers

Cost Centers are Structured into Organizational and/or Functional Hierarchical Groups

Cost Centers


Can Create Physical Hierarchy for Operational Management (ie.. Phila or Atlantic City)

Can Create Multiple Alternate Hierarchies for Functional Management (i.e. Accounting department in Stanford and the Accounting department in East Alton can be grouped together to form the corporate Accounting department or the operations accounting department)

Can Get Selected Balance Sheet Items at the Cost Center Level if the Right Modules have been Installed, specifically Fixed Assets(AM) . In the Fixed asset master record you can cross reference the asset to the cost center and see historical cost, accumulated depreciation and depreciation expense.


Cost Centers - Hierarchies



In SAP, a Cost Account is either Linked or not Linked to a Cost Center

The Linking is Performed by Creating the G/L Cost Account as a Cost Element under the CO Module

All Cost G/L Account Numbers can be Linked to One or Many Cost Centers(Depatment Codes)

Linking the G/L P/L Accounts to Cost Centers



3000US #13000US #1

3000New York

3000New York

3400Seattle3400

Seattle

3000Motor Sports


4000Motor Sports


4000Motor Sports



Plant

Purchasing Organization and Plants

Organizational Elements - MM



Responsible for Procurement for One or More Plants

Responsible for Negotiating Pricing and Delivery Terms with Vendors

Purchasing Organization is Assigned to A Company where Inventory is Legally Tracked or Costs are Legally Incurred.

Purchasing Organization



Purchasing Organization: Identify the proposed purchasing organization if any for customer being evaluated.

Benefits: Identify the benefits of recommended usage of purchasing organization.

Costs: Identify the costs of recommended usage of purchasing organization.


Purchasing Organization for Name of Customer



Usually a Manufacturing Facility, Warehouse, or a Location that Stocks , Manages, and Valuates Inventory

May be a Physical Site with Multiple Manufacturing/Production Lines

May be Multiple Manufacturing/Production Lines at One Physical Site

Can be a Physical Location (cost centers may or may not be associated to a plant, i.e. administrative vs. manufacturing cost centers)

SD Availability Checking is Normally Done at the Plant Level

Plant



Links to Production (PP), Materials Management (MM), and Sales and Distribution (SD)

A Plant is Assigned to A Company

Purchasing Organization are Assigned to Plants

Plant (Cont.)



Plant: Identify the proposed plants if any for customer being evaluated.

Benefits: Identify the benefits of recommended usage of plants.

Costs: Identify the costs of recommended usage of plants.


Plant for Name of Customer



A Location within a Plant where Inventory is Stored

Storage Location



Storage Locations: Identify the proposed storage locations if any for customer being evaluated.

Benefits: Identify the benefits of recommended usage of storage locations.

Costs: Identify the costs of recommended usage of storage locations.


Storage Locations for Name of Customer


Organizational Elements - SDSales Organization, Distribution Channel and Division

02Motorcycles

02MotorcyclesDivision

3000US Sales

3000US Sales

03Retail

03Retail

SalesOrganization

SalesOrganization

DistributionChannel

3000Motor Sports



90Accessories

90Accessories

4000Motor Sports


4000Motor Sports



Organizational Elements - SD

Legal Selling Unit Responsible for Revenue and Product Liability

Sales Orders belong to One Sales Organization(Header Level Assignment).

Master Data Maintenance for Customers, Pricing at Sales Organizatin Level

Sales Organization Assigned to a Company where Sales Revenue is Recognized(Links SD & FI)

Plants Assigned to a Sales Organization

Sales Organization



Sales Organization: Identify the proposed sales organizations if any for customer being evaluated.

Benefits: Identify the benefits of recommended usage of sales organizations.

Costs: Identify the costs of recommended usage of sales organizations.


Sales Organization for Name of Customer



Breakdown within Sales for Different Product Disbursement Methods, such as Wholesale vs Retail or National vs International

Master Data Maintenance for Materials, Pricing, at Sales Organization/Distribution Channel

Sales Order belong to one Distribution Channel (Header Level Assignment)

Distribution Channel assigned to a Sales Organization

Distribution Channel



Distribution Channels: Identify the proposed distribution channels if any for customer being evaluated.

Benefits: Identify the benefits of recommended usage of distribution channels.

Costs: Identify the costs of recommended usage of distribution channels.


Distribution Channels for Name of Customer



A way of Grouping Materials, Products, or Services

Sales Orders belong to One Division (Header Level Assignment)

Division



Division: Identify the proposed divisions if any for customer being evaluated.

Benefits: Identify the benefits of recommended usage of divisions.

Costs: Identify the costs of recommended usage of divisions.


Division for Name of Customer



Sales Area is a Combination of:Sales Area is a Combination of:

Sales OrganizationSales Organization

Distribution ChannelDistribution Channel

DivisionDivision

Used to View Sales-Related Master DataUsed to View Sales-Related Master Data

Sales Orders belong to One Sales Area (Header Sales Orders belong to One Sales Area (Header Level Assignment)Level Assignment)

Links the Order Entry System(SD) to the Links the Order Entry System(SD) to the Financial/Managerial System(FI/CO)Financial/Managerial System(FI/CO)

Sales Area


3000US #1

3000US #1

02Motorcycles

02Motorcycles

90Accessories

90Accessories

3000New York

3000New York

4000Seattle

4000Seattle

3000US Sales

3000US Sales

02Motorcycles

02Motorcycles

02Motorcycles

90Access.

90Access.

03Retail

90Assess.

BusinessArea


Division/Plant

DistributionChannel

Division

SalesOrganization

Complete Organizational Structure

3000Motor Sports


4000Motor Sports


4000Motor Sports



organization structure workshop

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