Understanding of SAP MM Organizational Structure

Organization levels of the Enterprise Structure in SAP MM.

In SAP Top level of organization is Client  
Company code 
Plant, 
Storage location.
Purchase organization,
Purchase group.

What is Client in SAP?   

The client is a Top level unit within an SAP system that is self-contained both in legal,organizational and in terms of data, with separate master records and an independent set of tables. From a business viewpoint, the client represents a corporate group, for example.

Client is highest hierarchical level in the SAP system. Specifications or data that you make and enter at this level apply to all company codes and all other organizational units. Therefore, you do not have to enter the specifications and data at client level more than once in the system. This ensures a uniform data status.

A client is uniquely defined in the system by a three-digit numeric key.

What is company code? Define company code.

The company code is the smallest organizational unit of external accounting for which a complete, self-contained bookkeeping system can be replicated. This includes the entry of all events that require posting to the accounts and the creation of a complete audit trail for balance sheets and profit and loss statements. A company code represents an independent unit producing its own balance sheet, for example, a company within a corporate group (client).

You can set up several company codes in one client in order to thus keep separate sets of financial books. You can use a special customizing function to copy a company code. In the process, company-code-dependent specifications are adopted for your new company code.

A company code is defined in the system by means of a four-character alphanumeric key that is unique in the client.

What is plant in SAP? Describe plant in brief. 

The plant is an organizational unit within logistics that subdivides an enterprise from the viewpoints of production, procurement, and materials planning.

A plant may represent a variety of entities within a firm, such as:

Production facility

Distribution center

Regional sales office

Corporate headquarters

Maintenance location

When creating a new plant, you can use the plant copy function. A plant is defined in the system by means of a four-character alphanumeric key that is unique in the client.

Describe “Storage Location” in brief? Or What is  “Storage Location” in SAP system? 

Storage location is an organizational unit that facilitates the differentiation of stocks of materials within a plant. Inventory management on a quantity basis is carried out in the plant at storage location level. The physical inventory is also carried out at this level. Storage location is a actual physical palace where the goods is kept.

A storage location is defined by means of a four-character alphanumeric key that is unique in the Plant.

Multiple storage locations may be assigned to a plant, but a certain storage location can only belong to one plant only. Storage locations are defined especially for a plant and are thus assigned to the plant. The key of a storage location need only be unique within a plant. Within a client, the same key can be used for different storage locations, since when you specify a storage location you always have to specify the plant too.

What is Purchase organization in SAP? 

The purchasing organization is an organizational unit within logistics that subdivides the enterprise according to the purchasing requirements. A purchasing organization procures materials or services, negotiates conditions of purchase with vendors, and assumes responsibility for these transactions.

You can incorporate purchasing into the company structure by assigning the purchasing organization to a company code and to plants. This means that you can take into account whether purchasing is organized on a centralized or decentralized basis in your company. You can have a combination of these two organizational forms.

You can assign one or more purchasing organizations to one company code. However, a certain purchasing organization can only belong to one company code. You can decide not to assign the purchasing organization to a company code (cross-company-code purchasing). There is an 1 to many relationship between purchasing organizations and plants. In other words, you can assign multiple plants to one purchasing organization, and one plant to multiple purchasing organizations.

What is Purchase Group in SAP?

Purchasing Group is a key for a buyer or group of buyers responsible for certain purchasing activities.

The purchasing group is:

Internally responsible for the procurement of a material or a class of materials.

Externally the principal channel for a company's dealings with its vendors.

The purchasing group is not aligned to other units in the company structure. Purchasing groups are not defined in Customizing for the Enterprise Structure, but in Customizing for

Materials Management → Purchasing → Create Purchasing Groups.