L20 Sapr3 Process2

Business Processes (FI/CO)Business Processes (FI/CO) and

Organization StructureOrganization Structure

AgendaAgenda

• Obtain an Understanding of the Customer’s Key Business Processes

• Define the Client’s Organization Structure in SAP based on those Business Processes

• Define the Organizational Elements in SAP based on the Company’s Business Processes and Reporting Requirements

• Document the Company’s SAP Organization Structure

• Company’s Mission Statement

• Markets

• Customer Base

• Products and Services

• SAP Implementation Drivers

Business OverviewBusiness Overview

Integrated Business Process ReviewIntegrated Business Process Review

• What are the legal entities that constitute your business?

• Do you produce legal financial statements for each one of these legal entites and do they have separate Federal Id Numbers?

• Which one of these entities are true operating companies

• Of these legal entities, which ones are Holding Companies?

• How do these legal entities relate to each other?

Legal Entity StructureLegal Entity Structure

Integrated Business Process OverviewIntegrated Business Process Overview

Integrated Business Processes Overview

Finance / Asset ManagementFinance / Asset Management

ProcurementProcurement

Logistics PlanningLogistics Planning

Sales LogisticsSales Logistics

ProductionProduction

Integrated Business Process Overview

Sales LogisticsSales Logistics

Inventory Sourcing

Inventory Sourcing DeliveryDelivery BillingBillingSales Order

Processing

Sales Order Processing

Pre-Sales Activities

Pre-Sales Activities

Financial and Managerial Reporting and AnalysisFinancial and Managerial Reporting and Analysis

G/L COS / Inventory

G/L COS / Inventory

AR Invoice /

GL Revenue

AR Invoice /

GL Revenue

Customer Payment

Customer Payment

FI

SD


Fore-cast

Fore-cast

Sales Oper Planning

Sales Oper Planning MPSMPS MRPMRP Order

Settlement

Order Settlement

CostingCosting

InventoryInventory

Manufacturing Execution

Manufacturing Execution

CapacityCapacity


ProductionProduction

SD

FI


Requirement for Goods /

Services

Requirement for Goods /

Services

Purchase

Order

Purchase

Order

Goods

Receipt

Goods

Receipt

Invoice

Verification

Invoice

Verification


ProcurementProcurement

G/L Inventory /

GRIR

G/L Inventory /

GRIR

G/L GRIR/ Expense

AP Invoice

G/L GRIR/ Expense

AP Invoice

Vendor

Payment

Vendor

Payment

ACCOUNTSRECEIVABLE

ACCOUNTS PAYABLE

ASSETMANAGEMENT

COST CENTERACCOUNTING (CCA)

INTERNAL ORDER ACCOUNTING (OPA)

PROJECTACCOUNTING

PRODUCT COSTING

PROFIT CENTER ACCOUNTING (PCA)

PROFITABILITY ANALYSIS (PA)

FINANCIAL ACCOUNTING (FI / AM)

FINANCIAL REPORTING (FI)

MANAGEMENT REPORTING (CO)

GENERAL LEDGERNATURALACCOUNT

Finance Management /Accounting & Reporting

SD

MM

Organizational Structure Review

3000US #1

3000US #1

02Motorcycles

02Motorcycles

90Accessories

90Accessories

3000New York

3000New York

4000Seattle

4000Seattle

3000US Sales

3000US Sales

02Motorcycles

02Motorcycles

02Motorcycles

90Access.

90Access.

03Retail

90Assess.

BusinessArea

PurchasingOrganization

Division/Plant

DistributionChannel

Division

SalesOrganization

Organizational Organizational StructureStructure

3000Motor Sports

International, Inc US

4000Motor Sports

International, IncCanada

4000Motor Sports


Motor Sports InternationalMotor Sports International


The ClientThe Client

Organizational Elements -Client

Organizational Elements - Client

• Highest Hierarchical Level in SAP(e.g. a corporation)

• Can be Used to Differentiate between a Development, Quality Assurance, and Production System within R/3

• All Areas of an Organization that are to be Integrated into the SAP R/3 Production System should be Included Under one Client

Client Characteritics Client Characteritics

Organizational Elements - Client (Cont.)

• Common Set of Rules– Common Tables– Common Master Files– Common Data Bases

• Standardized Data Across the Client– a vendor number and name is common across the

client– a customer is common across the client– a general ledger number and description is common

across the client– a material number and description is common across

the client

Client Characteritics Client Characteritics


3000Motor Sports International, Inc

US(Company)


US(Company)


Canada(Company)


Canada(Company)

CompanyCompany

Organizational Elements - FI


• Represents a legal/tax entity - Where do you legally represent the financial events of transacting business?

• Arms Lenghts Transactions

• Level of External Reporting or Legal Sets of Books

Company Company


• A Company is Assigned to:– Credit Management Area to allow for either

Centralized or Decentralized Credit Management(Credit Control Area)

– Financial Management Area-Treasury

– Departmental Accounting/Cost Center Area to allow for Centralized or Decentralized Departmental Reporting(Controlling Area)

Company Assignment Considerations Company Assignment Considerations



US(Company)


US(Company)


Canada(Company)


Canada(Company)

Business AreaBusiness Area


02Motorcycles

(business area)

02Motorcycles

(business area)

90Accessories

(business area)

90Accessories

(business area)


• Subset of Companies• Used for Segment Reporting in Accordance to law• Represents a Separate Area of Operations or

Responsibility within an Organization• Could be Shared Across Companies or Specific to a

Single Company• Lowest Level within FI that an Internal Balance Sheet

and Profit and Loss Statement can be Developed• Typically does not Have Shareholder Equity

Business AreaBusiness Area


• There are Three Chart of Accounts Concepts in SAP– Operating Chart of Accounts– Country Chart of Accounts– Group Chart of Accounts

Chart of Accounts Chart of Accounts


• G/L Account Master Records Required in One or Several Company Codes

• Postings are Made to these Accounts• Maximum of a 10 Digit Code• A company Must be Linked to One Operating

Chart of Accounts• An Operating Chart of Accounts can be Linked to

Many companies

Operating Chart of AccountsOperating Chart of Accounts

Linking of Chart of Accounts to Company CodesLinking of Chart of Accounts to Company Codes


OPERATINGCHART OF ACCOUNTS

Motor SportsInternational, Inc. US

1

Company Codes are linked to Chart of Account1

Motor Sports International, Inc. CA

1


• Represents the Account Structure Prescribed under National Regulations

• Optional Usage in SAP• Could be the Same as the Operating Chart of

Accounts or the Operating Chart of Accounts at the Company Level can be linked(mapped) to the Country Chart of Account

Country Chart of AccountsCountry Chart of Accounts


• Could be used for:– Consolidation Chart of Accounts– Corporate Group Rollup

• The Operating Chart of Accounts Master(not Company) is Assigned to a Corporate Chart of Accounts

• Optional Usage in SAP

Group Chart of AccountsGroup Chart of Accounts

Linking of Chart of Accounts to Company CodesLinking of Chart of Accounts to Company Codes


OPERATINGCHART OF ACCOUNTS

COMPANY CODE 1

1

Company Codes are linked to Chart of Account1

COMPANY CODE 2

1

The Operating Chart of Accounts is Linked to the Group Chart of Accounts

GROUPCHART OF ACCOUNTS

2

2


• Different from a lot of other Financial System Applications in that the G/L account is strictly comprised of the natural account code.

• The management reporting structures (i.e. cost centers, divisions, regions, and job orders) is not embedded within the chart of accounts.

• In SAP there is a relative relationship between the chart of accounts profit and loss natural account code and the cost centers.

Operating Chart of Accounts = General LedgerOperating Chart of Accounts = General Ledger

Organizational Elements - CO

02Motorcycles

02Motorcycles

90Accessories

90Accessories

BusinessArea

Controlling AreaControlling Area

3000Motor Sports

International, IncUS

3000Motor Sports


Company

Operating Chart of Accounts


ControllingArea

ControllingArea

4000Motor Sports


4000Motor Sports



• An organizational unit within a corporation in which comprehensive independent management accounting can be performed.

• Allows you to group companies from a Cost Accounting View.

• It links the financial accounting module (FI) to the management accounting module(CO) in SAP.



• The Operating Chart of Accounts Links Financial Accounting(General Ledger) to Management Accounting in the following way:– A Company Code is Linked to the Operating Chart of Accounts– The Controlling Area is Linked to the Operating Chart of

Accounts– A Company Code then can be Linked to any Controlling Area

as long as they are both Linked to the Same Operating Chart of Accounts

• Several Companies can be Linked to a Single Controlling Area regardless of the Companies Functional Currency. AGAIN, THE ONLY REQUIREMENT IS THAT ALL COMPANIES WITHIN THE CONTROLLING AREA MUST USE THE SAME OPERATING CHART OF ACCOUNTS.

Linking of FI and COLinking of FI and CO


• Highest Reporting Level under Cost Center Accounting across which Information can Shared and Viewed within the Controlling Module– Departmental Cost Information withing a Single

Controlling Area can be Viewed using the Standard Cost Center Reports in CO.

– Departmental Cost Information Across Controlling Areas can be viewed by Building User Definable Reports in the Special Ledger

– Interdepartamental Cost Allocations can only be performed in CO across Companies in the Same Controlling Area.



02Motorcycles

02Motorcycles

90Accessories

90Accessories

BusinessArea

Profit CentersProfit Centers

3000Motor Sports


3000Motor Sports


Company



ControllingArea

ControllingArea

4000Motor Sports


4000Motor Sports


Profit Center HierarchyProfit Center Hierarchy

PaintPaint PumpsPumps


• Used to Calculate the Profit of an Area of Responsibility within the Organization(e.g. Division)

• The Areas of Responsibility(Profit Centers) could be Based on Regions, Functions, or Products.

• Supports Calculating Operating Profit using the Cost of Goods Sold P/L Format and/or the Period Accounting Method

• A Profit Center can also be Viewed as an Investment Center since it is Possible to Transfer at Period End the Balance Sheet Positions for Assets, WIP, AR, AP, and Inventory

Profit Center AccountingProfit Center Accounting


• A Profit Center is not an Independent Account Assignment Object at the Moment of Entering a Transaction in SD or MM;It is Derived from Existing Objects

• As a Default, Revenue and Costs for Profit Centers are Derived as follows:– Sales Order Line Item based on the Product being Sold– Direct Costs Based on the Assignment of Production Orders and

Direct Costs. The System Proposes the Profit Center Based on the Profit Center of the Material Being Produced.

– Overhead Costs Based on the Assignment of the Cost Center or other Cost Object

• Substitution Rules can be Used to Change the Default Derivation

• Supports both Actual and Planned Data

Profit CenterProfit Center


02Motorcycles

02Motorcycles

90Accessories

90Accessories

BusinessArea

Cost CentersCost Centers

3000Motor Sports


3000Motor Sports


Company



ControllingArea

ControllingArea

4000Motor Sports


4000Motor Sports


Cost Center HierarchyCost Center Hierarchy

Sales - PaintsSales - Paints

Information Systems

Information Systems

Marketing

Profit Center HierarchyProfit Center Hierarchy

PaintsPaints PumpsPumps


• Departmental Breakdown of your Legal Entity Structure

• Lowest Level of Organization where you want to Collect and Analyze Costs/Departmental Performance

• Departmental Budgets and Expense Analysis of P & L Accounts

• Interdepartmental Cost Allocations• Each Cost Center is Assigned to a Company

Code, Business Area and Profit Centers • Cost Centers are Structured into Organizational

and/or Functional Hierarchical Groups

Cost CentersCost Centers

• Can Create Physical Hierarchy for Operational Management (ie.. Phila or Atlantic City)

• Can Create Multiple Alternate Hierarchies for Functional Management (i.e. Accounting department in Stanford and the Accounting department in East Alton can be grouped together to form the corporate Accounting department or the operations accounting department)

• Can Get Selected Balance Sheet Items at the Cost Center Level if the Right Modules have been Installed, specifically Fixed Assets(AM) . In the Fixed asset master record you can cross reference the asset to the cost center and see historical cost, accumulated depreciation and depreciation expense.

Organizational Elements - COCost Centers - HierarchiesCost Centers - Hierarchies


• In SAP, a Cost Account is either Linked or not Linked to a Cost Center

• The Linking is Performed by Creating the G/L Cost Account as a Cost Element under the CO Module

• All Cost G/L Account Numbers can be Linked to One or Many Cost Centers(Depatment Codes)

Linking the G/L P/L Accounts to Cost CentersLinking the G/L P/L Accounts to Cost Centers


3000US #13000US #1

3000New York

3000New York

3400Seattle3400

Seattle

3000Motor Sports


4000Motor Sports


4000Motor Sports



Plant

Purchasing Organization and PlantsPurchasing Organization and Plants

Organizational Elements - MM


• Responsible for Procurement for One or More Plants

• Responsible for Negotiating Pricing and Delivery Terms with Vendors

• Purchasing Organization is Assigned to A Company where Inventory is Legally Tracked or Costs are Legally Incurred.

Purchasing OrganizationPurchasing Organization


• Usually a Manufacturing Facility, Warehouse, or a Location that Stocks , Manages, and Valuates Inventory

• May be a Physical Site with Multiple Manufacturing/Production Lines

• May be Multiple Manufacturing/Production Lines at One Physical Site

• Can be a Physical Location(cost centers may or may not be associated to a plant i.e. administrative vs. manufacturing cost centers)

• SD Availability Checking is Normally Done at the Plant Level

PlantPlant


• Links to Production (PP), Materials Management (MM), and Sales and Distribution (SD)

• A Plant is Assigned to A Company

• Purchasing Organization are Assigned to Plants

Plant (Cont.)Plant (Cont.)


• A Location within a Plant where Inventory is Stored

Storage LocationStorage Location

Organizational Elements - SD

Sales Organization, Distribution Channel and DivisionSales Organization, Distribution Channel and Division

02Motorcycles

02MotorcyclesDivision

3000US Sales

3000US Sales

03Retail

03Retail

SalesOrganization

SalesOrganization

DistributionChannel

3000Motor Sports



90Accessories

90Accessories

4000Motor Sports


4000Motor Sports



• Legal Selling Unit Responsible for Revenue and Product Liability

• Sales Orders belong to One Sales Organization(Header Level Assignment).

• Master Data Maintenance for Customers, Pricing at Sales Organizatin Level

• Sales Organization Assigned to a Company where Sales Revenue is Recognized(Links SD & FI)

• Plants Assigned to a Sales Organization

Sales OrganizationSales Organization


• Breakdown within Sales for Different Product Disbursement Methods, such as Wholesale vs Retail or National vs International

• Master Data Maintenance for Materials, Pricing, at Sales Organization/Distribution Channel

• Sales Order belong to one Distribution Channel (Header Level Assignment)

• Distribution Channel assigned to a Sales Organization

Distribution ChannelDistribution Channel


• A way of Grouping Materials, Products, or Services

• Sales Orders belong to One Division (Header Level Assignment)

Division Division


Sales Area is a Combination of:Sales Area is a Combination of:

Sales OrganizationSales Organization

Distribution ChannelDistribution Channel

DivisionDivision

Used to View Sales-Related Master DataUsed to View Sales-Related Master Data

Sales Orders belong to One Sales Area (Header Sales Orders belong to One Sales Area (Header Level Assignment)Level Assignment)

Links the Order Entry System(SD) to the Links the Order Entry System(SD) to the Financial/Managerial System(FI/CO)Financial/Managerial System(FI/CO)

Sales AreaSales Area

Organizational Structure

3000US #1

3000US #1

02Motorcycles

02Motorcycles

90Accessories

90Accessories

3000New York

3000New York

4000Seattle

4000Seattle

3000US Sales

3000US Sales

02Motorcycles

02Motorcycles

02Motorcycles

90Access.

90Access.

03Retail

90Assess.

BusinessArea


Division/Plant

DistributionChannel

Division

SalesOrganization

Complete Organizational StructureComplete Organizational Structure

3000Motor Sports


4000Motor Sports


4000Motor Sports

