Subscribe

What are you looking for?

SAP MM Enterprise Structure Configuration Guide

SAP MM Enterprise Structure Configuration

Step-by-step guide for configuring Material Management Enterprise Structure in SAP S/4HANA

Introduction to Enterprise Structure

Enterprise Structure in SAP MM refers to the organizational framework that defines how your company is structured from a materials management perspective. It has two key parts:

Definition

Define organizational units like Plant, Storage Location, and Purchase Organization

Assignment

Link organizational units with each other to establish relationships

Note: SAP MM is an integrated module connecting with Finance, Sales, Production, and other modules. Some configuration such as company and company code is typically handled by FI consultants.

Enterprise Structure Hierarchy & Relationships

Understanding how different organizational units relate to each other is crucial for proper configuration. The diagram below shows the hierarchical structure and valid relationships between different components:

Company

Legal Entity

1:n relationship

Company Code

Accounting Entity

1:n relationship
1:n relationship

Plant

Manufacturing Unit

Purchase Org

Purchasing Department

m:n relationship
1:n relationship
1:n relationship

Storage Location

Material Storage

Purchasing Group

Buyers/Proc. Team

Company
Company Code
Plant
Purchase Org
Storage Location
Purchasing Group
Understanding Relationships:
  • 1:n relationship - One parent can have multiple children (e.g., one Plant can have multiple Storage Locations)
  • m:n relationship - Many-to-many relationship (e.g., one Plant can be assigned to multiple Purchase Organizations, and one Purchase Organization can be assigned to multiple Plants)
Invalid Relationships:
  • Storage Location cannot be directly assigned to Company Code (must go through Plant)
  • Purchasing Group cannot be directly assigned to Company Code (must go through Purchase Organization)
  • Storage Location cannot be linked to Purchase Organization
  • Purchasing Group cannot be linked to Plant
Definition
Assignment
Process Flow

Enterprise Structure Definition Components

The definition part involves creating different organizational units in the system. Here are the components and how to define them:

Company is the legal entity (client) for which you will be working. It's typically defined by the SAP FI team.

Definition Path: SPRO > SAP Reference IMG > Enterprise Structure > Definition > Financial Accounting > Define Company

Key Fields:

  • Company: Short name of the company
  • Name: Full name of the company
  • Country: Country where the company is located
  • Language: Default language
  • Currency: Default currency

Company Code is an organizational unit representing a business entity for accounting purposes. It's a 4-digit alphanumeric key.

Definition Path: SPRO > SAP Reference IMG > Enterprise Structure > Definition > Financial Accounting > Edit Company Code Data

Two options to define company code:

  1. Copy Delete Check Company Code: Copy from existing company code (for practice)
  2. Edit Company Code Data: Create or edit company code details

Key Fields:

  • Company Code: 4-digit alphanumeric key
  • Name: Name of the company code
  • City: City where the company code is located
  • Country: Country of the company code
  • Language: Default language
  • Currency: Default local currency
  • Address: Complete address of the company code

Plant is a manufacturing unit or service location where materials are produced or services are provided.

Definition Path: SPRO > SAP Reference IMG > Enterprise Structure > Definition > Logistics General > Define Plant

Key Fields:

  • Plant: Unique code for the plant (e.g., ADP1, ADP2)
  • Name: Description of the plant
  • Name 2: Additional description or location (optional)
  • Factory Calendar: Working days calendar (Standard: 01)
  • Address: Complete address of the plant

Storage Location is a physical or logical location within a plant where materials are stored.

Definition Path: SPRO > SAP Reference IMG > Enterprise Structure > Definition > Materials Management > Maintain Storage Location
Note: You must define the plant first before creating storage locations as each storage location is linked to a specific plant.

Key Fields:

  • Plant: Plant to which the storage location belongs
  • Storage Location: 4-digit code for the storage location (e.g., 0001, 0002)
  • Name: Description of the storage location (e.g., RM Store, FG Store)

You can create the same storage location code in different plants. For example, storage location 0001 can exist in multiple plants.

Purchase Organization is a department responsible for procurement activities.

Definition Path: SPRO > SAP Reference IMG > Enterprise Structure > Definition > Materials Management > Maintain Purchasing Organization

Key Fields:

  • Purchase Organization: Unique code for the purchasing organization (e.g., ADP0)
  • Name: Description of the purchase organization (e.g., ADGB Purchase Organization)

A company can have one centralized purchase organization or multiple purchase organizations for different locations.

Purchasing Group is a team or individual responsible for procurement of specific materials or services.

Definition Path: SPRO > SAP Reference IMG > Materials Management > Purchasing > Create Purchasing Group
Note: Purchasing Group is not strictly part of the Enterprise Structure but is a component within the Purchase Organization.

Key Fields:

  • Purchasing Group: 3-digit code for the purchasing group (e.g., 001, 002)
  • Description: Name or description of the purchasing group (e.g., Raw Material Buyers, Machinery Buyers)

Purchasing groups can be based on material types, import/domestic procurement, or different teams/individuals.

Enterprise Structure Assignment Components

After defining all organizational units, you need to establish relationships between them through assignments:

This assignment establishes the relationship between a company code and its parent company.

Assignment Path: SPRO > SAP Reference IMG > Enterprise Structure > Assignment > Financial Accounting > Assign Company Code to Company

Process:

  1. Navigate to the assignment path
  2. Find your company code using the position function
  3. Double-click the company code
  4. Assign the parent company using the search help (binocular icon)
  5. Save the assignment

This assignment connects plants to a specific company code for financial accounting purposes.

Assignment Path: SPRO > SAP Reference IMG > Enterprise Structure > Assignment > Logistics – General > Assign Plant to Company Code

Process:

  1. Navigate to the assignment path
  2. Click on New Entries
  3. Enter the plant code you defined earlier
  4. Assign it to the company code
  5. Save the assignment

A plant can only be assigned to one company code. This determines which company code receives the financial postings from transactions in that plant.

This assignment connects purchase organizations to company codes.

Assignment Path: SPRO > SAP Reference IMG > Enterprise Structure > Assignment > Materials Management > Assign Purchasing Organization to Company Code

Process:

  1. Navigate to the assignment path
  2. Click on New Entries
  3. Enter the purchase organization code
  4. Assign it to the company code
  5. Save the assignment

A purchase organization can be assigned to multiple company codes if it serves multiple legal entities.

This assignment links purchase organizations to plants, determining which purchase organization can procure for which plants.

Assignment Path: SPRO > SAP Reference IMG > Enterprise Structure > Assignment > Materials Management > Assign Purchasing Organization to Plant

Process:

  1. Navigate to the assignment path
  2. Click on New Entries
  3. Enter the purchase organization code
  4. Assign it to the plant
  5. Save the assignment

A purchase organization can be assigned to multiple plants, and a plant can be assigned to multiple purchase organizations.

Enterprise Structure Configuration Process Flow

Follow this step-by-step process to configure your SAP MM Enterprise Structure:

Step 1: Define Company

Create the legal entity (usually handled by FI consultant)

Transaction: SPRO > Enterprise Structure > Definition > Financial Accounting > Define Company

Step 2: Define Company Code

Create the accounting entity (usually handled by FI consultant)

Transaction: SPRO > Enterprise Structure > Definition > Financial Accounting > Edit Company Code Data

Step 3: Define Plant

Create manufacturing unit or service location

Transaction: SPRO > Enterprise Structure > Definition > Logistics General > Define Plant

Step 4: Define Storage Location

Create material storage locations within plants

Transaction: SPRO > Enterprise Structure > Definition > Materials Management > Maintain Storage Location

Step 5: Define Purchase Organization

Create purchase department entity

Transaction: SPRO > Enterprise Structure > Definition > Materials Management > Maintain Purchasing Organization

Step 6: Define Purchasing Group

Create buyer groups within purchase organization

Transaction: SPRO > Materials Management > Purchasing > Create Purchasing Group

Step 7: Assign Company Code to Company

Link company code to its parent company

Transaction: SPRO > Enterprise Structure > Assignment > Financial Accounting > Assign Company Code to Company

Step 8: Assign Plant to Company Code

Link plants to their respective company code

Transaction: SPRO > Enterprise Structure > Assignment > Logistics – General > Assign Plant to Company Code

Step 9: Assign Purchase Org to Company Code

Link purchase organization to company code

Transaction: SPRO > Enterprise Structure > Assignment > Materials Management > Assign Purchasing Organization to Company Code

Step 10: Assign Purchase Org to Plant

Link purchase organization to plants

Transaction: SPRO > Enterprise Structure > Assignment > Materials Management > Assign Purchasing Organization to Plant
Verification: To check your Enterprise Structure, use transaction code EC01. Navigate to Structure > Navigation to view the organizational hierarchy.
Important: Always remember what codes you've defined for each component, as you'll need them during the assignment phase. It's good practice to document them as you go.

Best Practices & Tips

  • Transport Requests: When saving configurations, you'll be prompted to create or select a transport request. For MM configurations, create a request with "MM: Enterprise Structure" as the description.
  • FI Components: In a real project environment, the FI team will create the Company and Company Code. For practice purposes, you can create them or copy from standard ones.
  • Documentation: Document all codes you create (Company Code, Plant, Storage Location, etc.) as you'll need them for subsequent assignments.
  • Naming Convention: Follow a consistent naming convention for your organizational units to make them easily identifiable (e.g., ADP1, ADP2 for plants).
  • Testing: After completing the configuration, verify it using transaction EC01 to ensure all assignments are correctly established.

S/4 HANA MM Consultant's Guide to Company Structure

Master the organizational elements, assignments, and career paths in SAP S/4 HANA Materials Management

Overview

As an S/4 HANA MM consultant, understanding the company's organizational structure is essential for effective implementation and configuration of the Materials Management module. This guide provides a comprehensive overview of the key organizational elements, their relationships, and how they impact MM processes.

SAP S/4 HANA uses a hierarchical organizational structure that defines how business processes are executed and how master data is organized. For Materials Management specifically, this structure affects procurement processes, inventory management, material valuation, and more.

This guide will walk you through:

  • The key organizational elements in S/4 HANA relevant to MM
  • How these elements are assigned and related to each other
  • The impact of organizational structure on MM processes
  • Career path options for MM consultants
  • Best practices for organizational structure design

Organizational Structure

Client (Mandant)

The highest organizational level in the SAP system. It represents a legally and organizationally independent company.

Configuration Level

Company Code (Buchungskreis)

An independent accounting unit that represents a legal entity for which financial statements are prepared.

Legal Entity Financial Reporting

Plant (Werk)

A location where materials are produced, stored, or distributed. Key organizational unit for MM processes.

MM Core Location-Based

Storage Location (Lagerort)

A physical or logical subdivision of a plant where materials are stored.

MM Core Inventory

Purchasing Organization (Einkaufsorganisation)

An organizational unit that procures materials and services for one or more plants.

MM Core Procurement

Purchasing Group (Einkäufergruppe)

A buyer or group of buyers responsible for certain purchasing activities.

MM Core Operational

Extended Definitions

Client (Mandant)
The highest organizational level in the SAP system. Each client has its own master data, transactional data, and user data. Clients are completely separated from each other. In S/4 HANA, client setup is typically handled by the basis team during system installation.
Company Code (Buchungskreis)
An independent accounting unit that represents a legal entity. Company codes are used for external reporting and financial statements. In MM, the company code determines valuation and accounting settings for materials, including price control and account determination.
Plant (Werk)
A physical location where materials are manufactured, stored, or distributed. Plants are central to MM as they drive inventory management, MRP, and procurement processes. Each plant belongs to exactly one company code.
Storage Location (Lagerort)
A physical or logical subdivision of a plant for storing materials. Storage locations help manage inventory more precisely and are used in goods movements, physical inventory, and reporting.
Purchasing Organization (Einkaufsorganisation)
An organizational unit responsible for negotiating purchase agreements with vendors and for the central procurement of materials and services. It can be assigned to one or more company codes and can procure for multiple plants.
Purchasing Group (Einkäufergruppe)
A buyer or team of buyers within a purchasing organization that is responsible for certain purchasing activities. Purchasing groups are often specialized by material type or vendor.
Valuation Area (Bewertungsbereich)
An organizational unit for material valuation. In S/4 HANA, the plant typically serves as the valuation area, but company code-level valuation is also possible.
MRP Area (Dispositionsbereich)
An organizational unit for materials planning. It can be a plant, storage location, or a combination of both.

S/4 HANA Organizational Structure Map

Explore the geographical representation of organizational elements. Client as continent, Company Codes as countries, Plants as states/provinces, and other elements as cities.

Organizational Structure Diagram is loading...

Map Legend

This geographical representation shows how organizational elements relate to each other in a spatial hierarchy. The continent (Client) contains countries (Company Codes), which contain states/provinces (Plants) and cities (Storage Locations, etc.). Trade routes represent the relationships between these elements.

Assignments & Mapping

Key Assignments in MM Organizational Structure

Organizational elements in S/4 HANA must be properly assigned to ensure integrated business processes. For MM consultants, understanding these assignments is crucial for proper configuration.

Assignment Description Transaction Impact on MM
Plant to Company Code Assigns a plant to a company code for financial integration OX19 Determines accounting treatment of inventory
Storage Location to Plant Creates storage locations within a plant OX09 Enables detailed inventory management
Purchasing Org to Company Code Assigns purchasing organization to company code(s) OX01 Enables procurement for the company code
Plant to Purchasing Org Assigns plant to purchasing organization OX18 Enables centralized or decentralized procurement
Purchasing Group to Purchasing Org Assigns purchasing groups within purchasing organization OMG4 Determines buyer responsibilities

Step-by-Step Assignment Process

When setting up a new company in S/4 HANA, follow these steps to establish the organizational structure for MM:

  1. Company Code Creation

    Create the company code first using transaction OX02 or S/4 HANA Fiori app "Manage Company Code." This is typically done by the FI consultant, but MM consultants should understand its impact.

  2. Plant Creation

    Create plants using transaction OX10 or Fiori app "Manage Plants." Define plant parameters including address, factory calendar, and controlling area.

  3. Plant to Company Code Assignment

    Assign plant to company code using transaction OX19. This critical step enables accounting integration for inventory transactions.

  4. Storage Location Creation

    Create storage locations for each plant using transaction OX09. Define names, addresses, and any special attributes.

  5. Purchasing Organization Setup

    Create purchasing organization using transaction OX01, then assign it to company code(s) and plant(s) using transactions OX01 and OX18 respectively.

MM Integration Metro Map

Organizational Line
Process Line
Integration Connections

Integration Metro Map is loading...

Understanding the Metro Map

This metro map visualization shows how organizational elements and business processes connect in S/4 HANA. The blue lines represent organizational elements (Company Code, Plant, Storage Location), while the green line shows the flow of Materials Management processes from Material Master through Invoice.

Career Path for MM Consultants

Career Progression for S/4 HANA MM Consultants

A career in S/4 HANA MM consulting typically follows these stages, with organizational structure expertise playing a key role at each level:

Junior MM Consultant

Experience: 0-2 years

Organizational Focus: Learning basic organizational elements and their relationships

  • Understanding key organizational units in MM
  • Learning transaction codes for organizational setup
  • Assisting with basic configuration under supervision

MM Consultant

Experience: 2-5 years

Organizational Focus: Configuring and mapping organizational elements

  • Independently configuring organizational structure for MM
  • Understanding cross-module integrations (FI, SD, PP)
  • Implementing best practices for organizational setup

Senior MM Consultant

Experience: 5-8 years

Organizational Focus: Designing optimal organizational structures

  • Designing complex organizational structures for global implementations
  • Optimizing existing structures for efficiency
  • Evaluating business impact of organizational decisions

MM Solution Architect

Experience: 8+ years

Organizational Focus: Strategic organizational design

  • Creating enterprise-wide organizational blueprints
  • Aligning organizational structure with business strategy
  • Leading cross-module organizational design decisions

MM Consultant Career Mountain Trail Map

Junior Level (Base Camp)
Mid-Level (Waypoint)
Senior Level (Advanced Camp)
Expert Level (Summit)

Career Path Diagram is loading...

Mountain Trail Map Insights

This mountain trail map visualizes the career journey of MM consultants as an ascent from the base camp (Junior Consultant) to the summit (Solution Architect). The main trail represents the primary career path, while branching trails show alternative specializations.

Skill Matrix for MM Organizational Structure Expertise

This matrix shows the expected skill levels for MM consultants at different career stages:

Skill Area Junior Consultant Consultant Senior Consultant Solution Architect
Organizational Setup Transactions Basic Proficient Expert Expert
Cross-Module Integration Awareness Basic Proficient Expert
Business Process Knowledge Basic Intermediate Advanced Expert
Organizational Design None Basic Proficient Expert
S/4 HANA Fiori Apps Basic Intermediate Advanced Expert

Best Practices

Organizational Structure Best Practices for MM Implementations

  • Keep it Simple: Design the organizational structure to be as simple as possible while meeting business requirements. Excessive complexity can lead to maintenance issues and user confusion.
  • Plan for Growth: Consider future business expansion when designing the organizational structure. Adding new plants or company codes should be straightforward.
  • Align with Business Reality: Ensure the SAP organizational structure reflects the actual business organization. This improves user adoption and process efficiency.
  • Standardize Naming Conventions: Use consistent naming conventions for all organizational elements to improve usability and reporting.
  • Document Thoroughly: Create comprehensive documentation of the organizational structure, including diagrams, assignments, and business rationale.
  • Consider Reporting Needs: Design the organizational structure with reporting requirements in mind. The structure will impact how data can be aggregated and analyzed.
  • Leverage S/4 HANA Simplifications: Take advantage of S/4 HANA simplifications in organizational structure, such as the extended material ledger and the Universal Journal.

Our site uses cookies. By using this site, you agree to the Privacy Policy and Terms of Use.

Accept
error: Content is protected !!