ENTERPRISE

STRUCTURE

SD integration with FI, CO and MM modules

Presented by:- Anuja Gaikwad

  Enterprise
Structure

SAP defines the Enterprise

Structure as “the definition of
specific organizational units
that together represent a
company’s business units and
divisions

General Organizational Structure

• Client:- The highest level in the SAP system,
representing the entire organization. Independent data
base.

• Operating Concern:- The operating concern is the

highest organizational unit eligible for profitability
analysis (COPA). The prime aim of COPA is to provide
profit and loss information to support decision making,
planning and controlling operations within an
organization.

• Controlling Area: The controlling area refers to the

highest level of an organization at which costs and
revenues are recorded. Each controlling area can have
one or more company codes assigned to it.

• Company Code: A company code represents a legal

entity in SAP. A company code is set up for every legal
entity which records transactions and maintains its
financial books (i.e. sub-ledgers and GL) in SAP. These
financial books enable the generation a complete set of
financial statements, including profit and loss, balance
sheet and cash flow.
• Plant:. : Represents a location where goods are
stored, produced, or distributed. A company code can
posses the assignment of one or more plant.
Generally, plants are defined within the enterprise
structure in the Materials Management module.

• Purchase Organization: This organizational unit

coordinates the purchasing process for the business.
Each company code can have one or more purchase
organizations assigned.

• Sales Organization: A sales organization is defined

within the Sales & Distribution module. It defines the
structure of sales operations and how goods and
services are sold to the customer.
 Enterprise Structure in SD module

• Company Code: A legal entity and functional unit

within the enterprise.

• Sales Organization: Represents a unit responsible

for the sales of goods and services. It is linked to the
company code.

• Distribution Channel: Defines how products are

distributed (e.g., retail, wholesale, etc.).

• Division: It represents a product line or a group of

similar products or services that are sold(e.g.,
electronics, clothing).

• Sales Area: A combination of Sales Organization,

Distribution Channel, and Division, which is used to
manage all sales and distribution activities.
• Sales Office: It represents a specific location or unit
within the company responsible for selling and
distributing goods and services.

• Sales Group: It is a subgroup within a sales office or

organization, consisting of a team or group of
salespeople

• Plant: Represents a location where goods are stored,

produced, or distributed.

• Storage Location: A subdivision of a plant, where

materials are stored.

• Shipping Point: Defines a location where goods are

shipped, often tied to a specific plant or distribution
center.

• Loading Point: A location where goods are loaded

onto transportation vehicles.
Enterprise Structure in FI module
• Client

• Controlling Area

• Chart of Accounts: A list of all accounts used by one or more company codes, defining the structure of the accounting
system.

• Fiscal Year Variant: Defines the fiscal year structure (e.g., calendar year or a different fiscal period)

• Credit Control Area: An organizational unit that represents the area where customer credit is awarded and monitored. This
organizational unit contains either a single or several company codes, if credit control is performed across several company
codes. Basic Decision - If the same customer needs a different credit limit if they are assigned to multiple company codes
then multiple credit control areas are required.

• Posting Period Variant: It is a configuration that specifies the open and closed periods for posting accounting documents
in SAP

• Business Area: Used for internal financial reporting. It allows the company to track and manage financial data across
various segments.

• Segment: A unit for financial accounting that aligns with reporting requirements like profit and loss, and balance sheet.
 On SAP System

Path: SPROSAP Reference IMG Enterprise Structure  Definition/Assignment

 Enterprise Structure in CO module
• Controlling Area: Represents an organizational unit for
cost accounting and controlling processes. A controlling
area can include multiple company codes if they use the
same chart of accounts and fiscal year

--- A controlling area may contain one or more company

codes, which can operate in different currencies, if required

--- The company codes within a controlling area must all

use the same operational chart of accounts

--- Controlling Areas are assigned to one Operating

concern

• Cost Center: A unit within the organization that

represents a place where costs are incurred (e.g.,
departments, production lines).

• Profit Center: An organizational unit that allows for

profitability analysis based on the company’s divisions or
product lines.
 On SAP System

Path: SPROSAP Reference IMG Enterprise Structure  Definition/Assignment

 FICO Module
The seamless integration of Financial
Accounting (FI) and Controlling (CO) in SAP is
one of the system's most powerful features.
This integration ensures that financial data
flows automatically between the two modules,
enabling real-time insights and comprehensive
financial control

SAP FI is centered around financial

reporting and accounting management,
while SAP CO emphasizes planning and
monitoring costs throughout the entire
organization.

• Primary cost elements are used to

represent actual costs that originate
from external sources (such as direct
expenses like salaries, materials, and
services) and are directly posted to the
Profit and Loss (P&L) account.
• Secondary cost elements are used to represent cost flows within the Controlling (CO) module (such as cost
centers, internal orders, or other CO objects).
 Enterprise Structure in MM module
• Client

• Company Code

• Plant: Represents a location where goods are stored,

produced, or distributed.

• Storage Location: A sub-unit of a plant, representing a

specific area for material storage.

• Purchasing Organization: A unit responsible for

negotiating and managing purchases, typically
centralized across plants or decentralized per plant.
Each company code can have one or more purchase
organizations assigned.

• Purchasing Group: A subgroup responsible for the

actual procurement of materials.

• Valuation Area: An organizational unit in MM that

specifies the area in which material is valued (usually a
plant). Created under valuation type, it controls
valuation class under Accounting type in MMR
Integration Between SD, MM, and FICO Enterprise
Structures
PLANT COMPANY CODE SHIPPING POINT & STORAGE
(Common Link) (Key Financial Link) LOCATION (Logistics Link)

 In SD, a Plant is assigned to  The Company Code is shared  The Shipping Point in SD is linked
Sales Organization and a across all modules as the to the Storage Location in MM to
Distribution Channel to enable fundamental accounting unit. manage outbound delivery and
order fulfillment.  Any transaction in SD (e.g., stock movement.
 In MM, the Plant is linked to billing) or MM (e.g., goods
Storage Locations for inventory receipt) posts financial entries
management. directly to the assigned  E.g.: A delivery created in SD picks
 In FICO, the Plant is linked to Company Code in FICO. stock from the relevant Storage
a Company Code for financial Location in MM, ensuring proper
transactions inventory updates.

 E.g.: When a ‘sales order’ is  E.g.: A sales invoice generated in

created in the SD module, SD updates revenue accounts in
the system references the FICO.
plant (from SD) to check  A purchase order in MM triggers
inventory levels (from MM) a financial posting in FICO for
and update the accounting accounts payable
entries (in FICO)
 CUSTOMER AND VENDOR MASTER DATA

 Shared master data elements ensure seamless information flow:

1. Customer Master (SD) ↔ Accounts Receivable (FICO)

2. Vendor Master (MM) ↔ Accounts Payable (FICO)
 Customer credit limits are maintained in FICO but are checked during order creation in SD.

 Key Elements in Enterprise Structure

 Sales Organization (SD) ↔ Company Code (FI): Sales organizations in SD are linked to a company
code in FI, ensuring that sales transactions are posted correctly in the financial accounting books.
 Plant (MM) ↔ Company Code (FI): The plant in MM is linked to the company code for procurement
and inventory management. Inventory valuation and procurement transactions affect the company
code in FI.
 Cost Center (CO) ↔ Sales Order (SD): Sales orders in SD can be linked to cost centers in CO for
internal cost tracking and profitability analysis.
 Purchasing Organization (MM) ↔ Company Code (FI): The purchasing organization in MM is also
linked to a company code for procurement processes. When purchase orders are created in MM, they
will trigger accounting entries in FI for inventory and accounts payable.
Thank
You!