SAP MM – basic configuration process and new organization units within existing organization

Due to the organization’s rapid development, new plants often occur. A certain configuration needs to be maintained to start the operational procurement process.

In the following article, two basic configuration items will be described: plant and purchasing organization creation.

Procurement operations

Procurement operations strive to understand demand as detailed as possible so they can focus on activities and discussions with suppliers, including suitable pricing, quantities, and timelines. Appropriate pricing, conditions, and timelines usually equal cost savings, which are one of procurement’s key value adds. A high-quality procurement process also states an appropriate level of relationship and understanding with the supplier.

The procurement process can be divided into some general areas:

• Operational purchasing – transactional procurement, core Purchase Order, Goods/Service receipt, Invoice. Occurs before invoice and Payables Management.
• Collaborative Sourcing and Contract Management – request for a quote, purchase, information process, source selection through bidding or single source, and contract definition. Occurs either after or before Operational Purchasing.
• Invoice and Payables Management: invoice submission by supplier, verification, and payment by accounts payable. This occurs after Operational Purchasing.
• Supplier Management includes supplier designation, master data, and performance management. It can occur simultaneously with other processes and steps and/or at the end of the procurement process.
• Procurement Analytics – analysis of core, key performance indicators, e.g., forecast planning, supplier performance, etc. The same is true for supplier management – it can occur parallel to other processes and/or at the end of the procurement process.

New organizational unit implementation  should be performed by three main areas of system design and configuration:

1. First step – define organization structure,
2. Second step – master data definition,
3. Last one – transactional data creation.

Purchasing Organization PL00 GBI Poland

The purchasing organization is responsible for procuring materials or services for one or more plants. It is also responsible for negotiating purchase conditions with suppliers. The purchasing organization is a required field and assignment for all main purchasing documents.

A new purchasing organization (PurOrg) is created through the IMG menu as follows: SPRO→Enterprise Structure→Definition→Materials Management→Maintain Purchasing Organization:

Plant PL03 Poland

Plant in SAP refers to different things. It could be:

• place with a valuated inventory, such as distribution centers,
• place where goods and services are produced, stored, consumed, and/or distributed,
• offices, either headquarters or sales office,
• anotherlocations type applicable to the system owner’s business and activities.

To manage the inventory at the plant level, the plant is divided into smaller organizations – storage locations.

Plant PL03 has been created through the IMG menu: SPRO→Enterprise Structure→Definition→Logistics-General→Define Plant→Add new entry

Adding Storage Location

Through the IMG menu: SPRO→Enterprise Structure→Definition→Materials Management→Maintain storage location, the following storage locations have been assigned to plant PL03:

Relationships and assignments

Relationship between Purchasing Organization and Company Code

Assigning the purchasing organization to a company code limits the purchasing organization to the plants of the company code to which it has been assigned. The assignment has been done through the IMG menu: SPRO→Enterprise Structure→Assignment→Materials Management→Assign Purchasing Organization to company code

Relationship between Plant and Company Code

The plant needs to be assigned to the Company Code. Without the Company Code, the plant cannot be used in the system – key accounting settings inherited from the company code would not be available. The assignment has been executed through the IMG menu: Enterprise Structure→ Assignment→ Logistic-General→ Assign Plant to Company Code

Relationship between Plant and Purchasing Organization

Plants must be assigned to at least one purchasing organization. The assignment can be done at the company code or plant level. Because the relationship between PurOrg PL00 and Company Code 0003 has been defined, the relation PurOrg-Plant is not required – plant PL03 was assigned to Company Code 0003, so the indirect relationship between plant PL03 and PurOrg PL00 exists.

Effects

The organization has been extended with new plant PL03 and purchase organization PL00, as intended. These structures have been assigned to existing company code 0003.

After the new levels are defined, it is possible to continue with implementing the procurement process by creating relevant master data objects.

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