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What is the Organizational Structure of SAP MM?

SAP MM (Materials Management) is a crucial aspect of the SAP ERP package. This module connects with other SAP systems and covers all elements of materials management, including purchasing, planning, and control, receiving products, inventory management, and invoice verification.

However, every organization has a framework or structure that governs how the organization operates. In the SAP ERP system, an organizational structure represents an enterprise. You can divide this structure into several units that are brought together for legal or economic reasons. Therefore, to get familiar with this module, it is necessary to have SAP MM Online Training in India. This training will make you understand the whole structure of the SAP MM and allow you to work efficiently.

SAP MM Organizational Structure

Several structures in SAP ERP reflect the company’s legal and organizational structure. However, you can structure all the enterprise elements such as accounting, human resources, and materials management. These structures can be mixed and matched. Moreover, you can handle all commercial transactions within the context of the organizational frameworks.

In addition, the MM module represents the following organizational units:

  • Client

In terms of business, the customer might represent a corporate organization. In the SAP system, the client is at the highest hierarchical level and is the synonym for a group. However, client creation in SAP is a technical need. In SAP, it is the topmost node or hierarchy of the enterprise or organizational structure. Moreover, a customer can keep track of many business codes.

  • Company Code

The company code in SAP is an organizational unit formed in the Finance (FI) module and is related to Materials Management. However, you can represent an independent corporation by the company code. A company is a legal entity that mandates the requirement of a separate balance sheet. Moreover, profit and loss statements are prepared and maintained at the corporate code level.

  • Plant

In the SAP system, the plant is a broad term with diverse definitions when different logistics modules come into play.

  1. A plant in the Materials Management (MM) module demonstrates a facility where you can store and maintain the material stock.
  2. Also, a plant is a manufacturing facility where you can develop commodities in the Production Planning (PP) module.
  • Storage Location

The storage location is an organizational element that distinguishes distinct material stockpiles in a facility.

Also, it is a physical site where you can hold your stock.

However, a plant might have many storage facilities where you can store all your saved data.

  • Purchasing Organization

A purchasing organization is an organizational entity inside a company or factory responsible for procurement activities in accordance with regulations. Also, it is responsible for foreign procurement.

However, you can locate a purchasing organization at the client level, also known as a centralized purchasing organization.

Moreover, a purchasing organization can exist at the business or plant level and is referred to as a company-specific or plant-specific purchasing organization.

In addition, you can divide the purchasing organization into three types:

  • Centralized Purchasing

Under centralized purchasing, you can not assign the purchasing organization to any agency code. Instead, it purchases for all business codes associated with a given customer.

  • Company Specific Purchasing

You can issue one business code to the purchasing organization. This purchasing organization can make purchases for the plant using the business code.

  • Plant-Specific Buying Purchasing

Under plant-specific purchasing, you can allocate the factory to the purchasing organization. This purchasing organization is only available to the specific plant.

  • Purchasing Group

The last element of the SAP MM organizational structure is the Purchasing Group. It is an individual or group of individuals, not necessarily from the procurement department. They are responsible for purchasing activities. Often, you can use this element for reporting and the approval method for Purchase Requisitions (PR), Requests for Quotation (RFQs), Purchase Orders (PO), Contracts, and other items.

Conclusion

Hopefully, you find this article informative. We have compiled the different elements of the organizational structure of SAP MM. This structure defines the level incorporated by every organization in the material management process. Also, this structure helps the organization simplify material management. Therefore, to become familiar with this organizational structure, it is necessary to have SAP MM Training in Noida. So, it’s the best time for you to start working on your career goals.

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