SAP MM CONFIGURATION

ORGANIZATION LEVEL IN THE PROCUREMENT PROCESS

Client

Company Code

Plant

Storage
Location

Company Code

Plant

Plant

Storage
Location

Storage
Location

Storage
Location

Client:
The client is a commercial, organizational unit within the R/3 System, with its own data,
master records, and set of tables. For a business perspective, the client forms a corporate
group.

Company Code:
The company code is the smallest organizational unit for which you can have an independent
Accounting department within external Accounting.
A company code represents an independent accounting unit, for example, a company within a
corporate group (client).

Balance sheets and Profit and Loss statements, required by law, are created at company
code level.

You can set up several company codes in one client in order to manage various separate
legal entities simultaneously, each with their own balanced set of financial books.

You can use a special Customizing function to copy a company code. This copies the
company code specifications to your new company code.

Plant:
A plant is an organizational logistics unit that structures the enterprise from the perspectives
of production, procurement, plant maintenance, and materials planning.
A plant is a manufacturing facility or branch within a company.

A Plant can be one if the following types of locations:

o Central delivery warehouse
o Regional sales office
o Manufacturing facility
o Corporate headquarters
o Maintenance plant

When creating a new plant, you can use the plant copying function, when you use this
function, the system processes the entry in the plant table and in all dependent
Customizing and system tables in which the plant is included as key.

Storage Location:
The storage location is an organizational unit that allows the differentiation of material stocks
within a plant.
Inventory management on a quantity basis is carried out at storage location level in the plant.
Physical inventory is carried out at storage location level.

VALUATION AREA
Valuation area is organizational level which material is valuated. Two possible
1) Company Code: Valuated at company code level, the valuation price of a material is
the same in all of a companys Plant (that is, in a company code).
2) Plant: Valuated at plant level, you can valuate a material in different plants at
different prices.
Note: valuation at plant level is mandatory if you want to use either of the production
planning or product cost accounting components, or if your system is a Retail system.

PURCHASING ORGANIZATION
It is an organizational level that negotiates conditions of purchase with vendors for one or
more plants. It is legally responsible for completing purchasing contracts.
Note: You can assign the purchase organization to company codes (centralized) and plants
(decentralized) or combination of both.

Plant Specific Purchasing organization:

A purchasing organization is responsible for procuring materials for one plant only.

Cross Plant purchasing organization

You can set up a cross-plant purchasing organization for each company code. This
purchasing organization procures material and services for all plants assigned to the company
code.

Cross Company Code Purchasing Organization

If you want to organize purchasing on a cross-company-code basis, you cannot assign a
company code to the purchasing organization in customizing. When you create a purchase
order, for example, the system asks you to enter the company code for which you want to
procure the material.