Enterprise structure or Organizational structure in SAP is a structure of SAP organizational units that reflects the structure of the business in the real world. There are various SAP organizational units that can be mapped to business structure based on the real world business requirements such as: Client, Company Code, Plant, Storage Location, Sales Organization, Distribution Channel, Division, Sales Office, Sales Group, Sales Person, Shipping Point, Loading Point, etc.
We must set the enterprise structure correctly in the first place. The change of it usually requires a great effort and very time consuming. To set it up correctly we must have a comprehensive knowledge about the business processes and how to map it to SAP configuration.
A specific organizational unit is defined by a specific function or module in SAP. Company code is defined by FI module. Plant is defined by Logistics function. Storage Location and Purchasing Organization are defined by MM module.
In SD module we have to define Sales Organization, Distribution Channel, and Division. We have an option whether to use Sales Office, Sales Group, and Sales Person or not.
Sales Organization is an organizational unit that responsible to sell and distribute products and negotiate the term of sales to the customers. Sales Organization is the highest organizational unit in SD module. We should have only one Sales Organization in one company code. We must have a very good reason in term of business process to create more than one Sales Organizations in one company code. For example, we want to divide the market into regions where each region is responsible for its own product liability and customer rights-of-recourse (right to recover a bad debt).
A sales organization must be assigned exactly to one company code.
A sales organization is assigned to one or more plants.
Distribution Channel is an organizational unit that represents the channel through which the materials or services reach the customer, such as wholesale channel, direct sale channel, retail channel, etc.
A distribution channel can be assigned to one or more sales organizations.
Division is a way to group materials or services. A wide range of materials or services can be divided into divisions. A material or service is always assigned to just one division.
In SAP SD, the use of divisions allows us organize our sales structure around groups of similar products or product lines. We can define a division-specific sales structure. Within a division, we can also carry out statistical analyses or devise our own marketing strategies.
A sales area is a combination of sales organization, distribution channel and division. Sales documents, delivery documents, and billing documents are always assigned to a sales area. Every sales process always takes in a specific sales area.
SAP SD enterprise structure and master data
Master data is data records that remains in the database for a long period of time. In SAP SD module, master data includes materials, customers, conditions (pricing), etc.
Master data is created centrally and can be used in all applications. A customer is master data that can be used in customer requests, orders, deliveries, invoices, and payments.
Master data also has an organizational aspect as it is assigned to organizational units.
Material master data
Division is a field in the material master data (it can be input/edited on “Basic Data 1” view by MM01/MM02 t-code). That’s why a material is always assigned to just one division.
A material can be sold through one or more distribution channels in one or more sales organization. To allow it, we have to maintain the material master data for each combination of sales organization and distribution channel.
We can set different data of a material for each combination sales organization and distribution channel, such as: “minimal order quantity” and “minimal delivery quantity” data. By doing so, for example, a material must be ordered by customer minimal 1000 PC for wholesale channel and 10 PC for retail channel (assumed we only have one sales organization).
Customer master data
A customer can buy one or more divisions (group of products or services) from one or more distribution channels in one or more sales organizations. To allow it, we have to maintain the customer master data for each combination of sales organization, distribution channel, and division (which is a sales area).
We can set different data of a customer for each sales area, such as: “delivering plant”, “shipping conditions”, and “delivery priority”. By doing so, for example, we can set that if a customer orders a material or service (with includes in a division) through a wholesale channel in a sales organization, we deliver it with “high” delivery priority. But, if that customer orders the same material or service (with includes in a division) through a retail channel in same sales organization, we deliver it with “standard” delivery priority.
Conditions (pricing) master data
A company usually sells a material or service at different price conditions for different channel distributions. For example, it gives more discounts for same material or service that sold through wholesale channel than through retail channel (it’s because the minimal order quantity for wholesale channel is usually much bigger than retail channel).
In SAP SD, we can set different materials or services pricing conditions that sold to the same customer for each combination of distribution channel and sales organization.
The rule of thumb in determining SAP enterprise structure is try to create as simple as it can. We must have a very good reason in term of business process to create any additional organizational units of SAP enterprise structure.
SAP Study Materials Series e-Book
To get more details on SAP Enterprise Structure, you can buy my e-book (50 pages .pdf file) at SAP Study Materials Store.
The e-book explains in details about the SAP Enterprise Structure (MM and related modules such as FI, Logistics, and SD) Concept and Configuration Guide. Just like other articles on my SAP Study Materials blog, I wrote the e-book in a simple-to-understand way, so you can learn it easily. You don’t need to have extensive SAP knowledge and experience to be able to configure the SAP Enterprise Structure, as the e-book start explaining each step with the basic concept behind it. After understanding the concept, the e-book will show the step-by-step configuration with the screen shots.