Step 1: Define Company
Create the legal entity (usually handled by FI consultant)
Step-by-step guide for configuring Material Management Enterprise Structure in SAP S/4HANA
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:
Define organizational units like Plant, Storage Location, and Purchase Organization
Link organizational units with each other to establish 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:
Legal Entity
Accounting Entity
Manufacturing Unit
Purchasing Department
Material Storage
Buyers/Proc. Team
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.
Key Fields:
Company Code is an organizational unit representing a business entity for accounting purposes. It's a 4-digit alphanumeric key.
Two options to define company code:
Key Fields:
Plant is a manufacturing unit or service location where materials are produced or services are provided.
Key Fields:
Storage Location is a physical or logical location within a plant where materials are stored.
Key Fields:
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.
Key Fields:
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.
Key Fields:
Purchasing groups can be based on material types, import/domestic procurement, or different teams/individuals.
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.
Process:
This assignment connects plants to a specific company code for financial accounting purposes.
Process:
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.
Process:
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.
Process:
A purchase organization can be assigned to multiple plants, and a plant can be assigned to multiple purchase organizations.
Follow this step-by-step process to configure your SAP MM Enterprise Structure:
Create the legal entity (usually handled by FI consultant)
Create the accounting entity (usually handled by FI consultant)
Create manufacturing unit or service location
Create material storage locations within plants
Create purchase department entity
Create buyer groups within purchase organization
Link company code to its parent company
Link plants to their respective company code
Link purchase organization to company code
Link purchase organization to plants
Master the organizational elements, assignments, and career paths in SAP S/4 HANA Materials Management
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 highest organizational level in the SAP system. It represents a legally and organizationally independent company.
Configuration LevelAn independent accounting unit that represents a legal entity for which financial statements are prepared.
Legal Entity Financial ReportingA location where materials are produced, stored, or distributed. Key organizational unit for MM processes.
MM Core Location-BasedA physical or logical subdivision of a plant where materials are stored.
MM Core InventoryAn organizational unit that procures materials and services for one or more plants.
MM Core ProcurementA buyer or group of buyers responsible for certain purchasing activities.
MM Core OperationalExplore 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...
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.
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 |
When setting up a new company in S/4 HANA, follow these steps to establish the organizational structure for MM:
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.
Create plants using transaction OX10 or Fiori app "Manage Plants." Define plant parameters including address, factory calendar, and controlling area.
Assign plant to company code using transaction OX19. This critical step enables accounting integration for inventory transactions.
Create storage locations for each plant using transaction OX09. Define names, addresses, and any special attributes.
Create purchasing organization using transaction OX01, then assign it to company code(s) and plant(s) using transactions OX01 and OX18 respectively.
Integration Metro Map is loading...
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.
A career in S/4 HANA MM consulting typically follows these stages, with organizational structure expertise playing a key role at each level:
Experience: 0-2 years
Organizational Focus: Learning basic organizational elements and their relationships
Experience: 2-5 years
Organizational Focus: Configuring and mapping organizational elements
Experience: 5-8 years
Organizational Focus: Designing optimal organizational structures
Experience: 8+ years
Organizational Focus: Strategic organizational design
Career Path Diagram is loading...
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.
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 |
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