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SAP fundamentals · Lesson

Organizational structure

Quick answer

These units are assigned to each other, plants to company codes, sales organizations to company codes, so that logistics events flow to the correct legal entity for accounting.

Key takeaways

  • Before you can post an invoice or raise an order, SAP needs to know the legal, logistical and reporting entities involved.
  • Company code: the legal entity for financial reporting (FI).
  • Plant: a location where goods are produced or stored (logistics).
  • Watch out: Designing the structure carelessly, it is very hard to change later.

Why it comes first

Before you can post an invoice or raise an order, SAP needs to know the legal, logistical and reporting entities involved. The organizational structure defines these units and their relationships, and it is one of the earliest and most consequential configuration decisions in any implementation.

Key organizational units

  • Company code: the legal entity for financial reporting (FI).
  • Plant: a location where goods are produced or stored (logistics).
  • Storage location: a stock area within a plant.
  • Sales organization / distribution channel: for selling (SD).
  • Purchasing organization: for buying (MM).
  • Controlling area: for cost accounting (CO).

They interlock across modules

These units are assigned to each other, plants to company codes, sales organizations to company codes, so that logistics events flow to the correct legal entity for accounting. Designing this structure correctly is essential; changing it later is painful.

Common pitfalls

  • Designing the structure carelessly, it is very hard to change later.
  • Confusing legal (company code) and logistical (plant) units.
  • Missing the cross-module assignments that make integration work.

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Check your understanding

  1. Which statement is true of Organizational structure?

    • A. The organizational structure defines these units and their relationships, and it is one of the earliest and…
    • B. Output determination in SD controls the documents and messages sent to customers and internally, order…
    • C. The Transport Management System (TMS) is how SAP moves configuration and development changes between systems…
    Show answer

    A. The organizational structure defines these units and their relationships, and it is one of the earliest and…

    Covered in the “Why it comes first” section of this lesson.

  2. Which of these also applies to Organizational structure?

    • A. Not deactivating leavers promptly, orphaned accounts.
    • B. Assuming HANA is just a faster disk DB, it is architecturally different.
    • C. Designing this structure correctly is essential; changing it later is painful.
    Show answer

    C. Designing this structure correctly is essential; changing it later is painful.

    Covered in the “They interlock across modules” section of this lesson.

  3. Which part of the Learn SAP curriculum covers Organizational structure?

    • A. SAP fundamentals
    • B. SAP administration
    • C. SAP Fiori
    Show answer

    A. SAP fundamentals

    This lesson sits in the SAP fundamentals section of the Learn SAP course.

Frequently asked questions

What does the term Organizational structure refer to in SAP?

The organizational structure in SAP is the framework of organizational units, company code, plant, storage location, sales organization and more, that models your business inside the system. It is configured first, because every process and posting is assigned to these units.

What is worth remembering about Organizational structure in practice?

These units are assigned to each other, plants to company codes, sales organizations to company codes, so that logistics events flow to the correct legal entity for accounting.

What is another point to note about Organizational structure?

Before you can post an invoice or raise an order, SAP needs to know the legal, logistical and reporting entities involved.

What tends to go wrong with Organizational structure?

Designing the structure carelessly, it is very hard to change later. Confusing legal (company code) and logistical (plant) units. Missing the cross-module assignments that make integration work.
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