Organization of an Enterprise in the SAP MM Purchasing System

Use

This section describes the organization of an enterprise in the SAP system. The section also demonstrates how Purchasing is integrated into this structure.

Features

Organizational Levels

The structure of an enterprise is represented in the SAP R/3 System by the following organizational levels:

Client
A grouping or combination of legal, organizational, business and/or administrative units with a common purpose.

Example: corporate group.

Company code
This level represents an independent accounting unit within a client. Each company code has its own balance sheet and its own profit and loss statement.

Example: a subsidiary company, member of a corporate group.

Plant
Operational unit within a company code.

Example: production facility, branch office.

Purchasing organization
An organizational unit responsible for procuring materials or services for one or more plants and for negotiating general conditions of purchase with vendors. The purchasing organization assumes legal responsibility for all external purchase transactions.

Purchasing group
The purchasing organization is further subdivided into purchasing groups (buyer groups), which are responsible for day-to-day buying activities.
A purchasing group can also act for several purchasing organizations.

Assignment of Organizational Levels

In the SAP system, a plant must be assigned to one or more purchasing organizations. Furthermore, a plant must always be assigned to a company code. A purchasing organization can, but need not, be assigned to a company code.

If you make no assignments of purchasing organizations to company codes, each purchasing organization can engage in procurement operations for every company code.
A precondition for this is that the plant for which procurement is carried out is assigned to the purchasing organization.

Central/Distributed Purchasing
You can set up your Purchasing function as

• A central purchasing unit with one purchasing organization, or as
• A distributed purchasing system, with different purchasing organizations, each responsible for different plants

Depending on the way your system is set up, you can keep the individual purchasing organizations separate, or permit a reference purchasing organization to negotiate a comprehensive contract (having more advantageous conditions due to greater purchase volumes) with a vendor. Other purchasing organizations, responsible for procurement in the individual plants, would then also be able to release (call off) materials against this contract by issuing release (call-off) orders.

For information on centrally agreed contracts, refer to the section Centrally Agreed Contract.

Working with a reference purchasing organization saves time and effort in maintaining data because purchasing organization data, vendor master records, and purchasing info records only have to be created by the reference purchasing organization. Other purchasing organizations that are linked to the latter via Customizing can use this data without having to maintain data themselves.

With the aid of SAP Application Link Enabling (ALE), individual companies belonging to a group but working with separate SAP systems can make common use of contracts. The latter are referred to as "distributed contracts" in such cases.

For information on this topic, refer to the section Distributed Contracts

You can set up your system in such a way that one purchasing organization procures material for a plant from a vendor (plant) that belongs to another company code within the same client (corporate group). This is an instance of an inter-company stock transfer with an SD delivery and a billing document.

For information on inter-company stock transfers, refer to the documentation MM Special Stocks and Special Forms of Procurement in Materials Management ( section Cross-Company Stock Transfer).

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