Chapter 3
Organizational Structures
Flexible organizational units in the SAP System enable you to reproduce
even complex business structures. You can use the wide range of organiza-
tional units offered to represent the legal and organizational structure of
your organization from different points of view.
The Project System has no organizational structures of its own, but is inte-
grated with the structure of your organization by the assignments you make
to the organizational units in Accounting and Logistics.
The highest element of all organizational units is called the "client". It corre- Client
sponds to a business with several subsidiaries.
Organizational Structures in Accounting
The Project System is linked with the organizational structures in Account-
ing as follows:
The company code is an independent accounting unit within a client. Legally Company Code
required balance sheets and profit and loss (P&L) statements are created at
company code level.
Figure 3-1: Project System Organizational Structures in Accounting
The business area is a separate unit within a company, for which you can Business Area
produce an internal balance sheet and P&L statement. In contrast to external
balance sheets and P&L statements, however, these reports do not satisfy all
legal requirements.
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3 Organizational Structures
Controlling Area The controlling area is the business organizational unit, within which cost
accounting takes place. To carry out joint cost accounting for several com-
pany codes in an organization, assign those codes to the same controlling
area.
Cost Center The cost center is the place within a company where costs are incurred. It is
an area within a company distinguished by area of responsibility, location,
or accounting method.
Profit Center A profit center is an independent sub-area within an organization. The basic
aim of profit center accounting is to present such areas as units which oper-
ate independently in the marketplace.
Organizational Structures in Logistics
The Project System is linked with the organizational structures in Logistics
as follows:
Purchasing Organization The purchasing organization is the unit within a company that procures
materials or services for one or more plants and negotiates contract condi-
tions with vendors. As seen from outside, the purchasing organization is
responsible for all procurement activities and is therefore assigned one com-
pany code.
Figure 3-2: Organizational Structures in the Project System
Purchasing Group The purchasing organization is further broken down into purchasing groups
that are responsible for daily operations.
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Organizational Structures 3
A plant is where products and components are produced. It can also be sim- Plant
ply the grouping of locations with stock, called "storage locations". The plant
makes up a unit for material requirements planning and inventory manage-
ment and is the main organizational element in Materials Management.
The storage location is defined as a physical area where materials are stored. Storage Location
Inventories can be differentiated within a plant by storage location.
Figure 3-3: Assigning Organizational Structures in the Project System
The work center is another unit within the plant where output is produced Work Center
by either machines or people.
You can create any number of work center hierarchies to cumulate work
center capacities.
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3 Organizational Structures
Functional Location and A functional location is the unit in the plant maintenance system represent-
Equipment ing the place where the technical function is to be carried out. Equipment, on
the other hand, comprises the objects to be processed.
What are the advantages of the SAP organizational structures?
❏ They represent complex structures in a company with flexible units.
❏ They display the various views that different areas of a company have of
a project.
❏ They facilitate the integration of the project organization in the
organizational structures of Accounting and Logistics.
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