1. Set evaluation level, define/assign factory
Concept and function description
Evaluation scope: It is an organizational unit in logistics, used to divide enterprises to achieve unified and complete evaluation of material inventory.
You define the scope of valuation by specifying the level at which items are to be valuated. This specification applies to the entire client.
Option One: Valuation Scope = Company Code:
Material valuation data is created for each company code. Price control and prices for materials are applied per company code. Therefore, the materials of all plants belonging to a company code are valuated together.
Option Two: Valuation Scope = Plant:
Material valuation data is created for each plant. Price control and prices for materials are applied per plant. Therefore, the same material in different plants can be valued differently.
In a production system, it is not possible to simply switch the scope of evaluation from plant to company code and vice versa. In this case, existing data must be converted.
For Production Planning (PP) and Product Costing, the Plant Valuation level is mandatory. The same applies if your system is a mySAP retail system.
Remarks: Most projects generally choose option 2: Evaluation scope = factory
Factory: It is an organizational unit in logistics, which subdivides the enterprise from the perspective of production, procurement, maintenance and material planning.
A plant is an operating unit or branch in a company that has the following characteristics:
• Only one business area is assigned to a plant and a product group.
• A plant can be assigned to several sales organization/distribution channel combinations.
• A plant can have multiple shipping locations. A transshipment location can be assigned to multiple plants.
• A factory has an address and language, and belongs to a country.
• The plant has its own material master data. In particular, you can maintain plant-level data for the following material master record views: MRP, Purchasing, Inventory, Work Planning, Production Resources/Tools, Forecasting, Quality Management, Sales and Distribution, Costing.
• A plant must always be assigned to a company code. However, one company code can include several plants.
Business example
Set the factory level evaluation scope and create a P755 factory as an example.
Configuration Steps
Configuration 1:
Configuration 2:
Save and pop up the following maintenance interface.
Like a company, each factory has its own name, address, communication method and other detailed data, which can be maintained in the above picture.
After saving the definition of the factory is completed.
Configuration 3:
Assign the factory defined in configuration 2 to the corresponding company.
2. Define the stocking location
Conceptual and functional description
Storage location codes must be unique within a plant. This means that you can use the same storage location in each plant. You can thus define storage location codes according to their functionality and set up a uniform storage location structure for all plants.
You can maintain one or more addresses for each storage location. These addresses can be different from the factory address. If you maintain a storage location address and specify this storage address in the purchase order, the associated address is exported as the delivery address.
Business example
Add W001, W002, W003 inventory location for factory B755.
Configuration steps
After saving, one or more addresses can be maintained for each storage location.
For example, maintain the following 001 as an example
3. Define/Assign Purchasing Organization
Concept and Function Explanation
Purchasing Organization: It is an organizational unit in logistics, which divides enterprises into subdivisions according to different procurement requirements. The purchasing organization purchases materials or services, negotiates purchase terms with suppliers, and sets responsibility for these operations.
A purchasing organization can be assigned to a company code. After you assign a purchasing organization to a company code, you can assign it only to the plants of the company code. Therefore, if it is the central purchasing department of the company group (as the purchasing organization), it is not assigned to the company code.
• Each purchasing organization (in the standard SAP system) has its own information records and pricing conditions.
• Each purchasing organization has its own supplier master data (only purchasing data and partner roles).
• Each purchasing organization independently evaluates its own suppliers using the MM supplier evaluation function.
• Each purchasing organization can be granted authority to handle relevant purchasing transactions.
• All purchasing document items (such as RFQs, POs, contracts, or scheduling agreements) are assigned to the same purchasing organization.
• Purchasing Organization is the highest summary level of purchasing statistics after the Client Organization level
• Purchasing Organization is used as selection criteria for all purchasing document lists.
Business example
Define purchasing organization B755, assign to factory P755, and use it as factory P755 standard purchasing organization.
Configuration steps
Configuration 1
Save to complete the definition.
In configuration 2
, if you assign the purchasing organization to a company code, you can only assign it to the factory of the company code in configuration 3. Considering the centralized purchasing business in the future, that is, one purchasing organization can serve multiple companies, here is no to configure.
Configuration 3
Purchasing organization must be assigned to a factory before it can perform purchasing business for the factory.
Configuration 4
Standard Purchasing Organization: If multiple purchasing organizations purchase for a specific plant, you can designate one of them as the standard purchasing organization for pipeline resource procurement, consignment, and stock transfer transactions. The system then automatically acquires this standard purchasing organization during source determination for stock transfers and consignments. When consignment and shipment of pipeline resource materials, the purchase information record of the standard purchase organization will be read. At the same time, the purchasing info records of these standard purchasing organizations are applied to evaluate the goods receipt when the purchase order is automatically created by goods receipt posting.
Configuration 5
Reference purchasing organization: You can use the reference purchasing organization to facilitate procurement transactions across purchasing organizations. Thus, you can approve multiple favorable conditions and use centralized approval contracts based on larger purchase quantities, or you can simplify the maintenance process of conditions.
Other purchasing organizations may use the conditions of the reference purchasing organization for pricing purposes. Similarly, multiple purchasing organizations are allowed to access the contracts of a specific reference purchasing organization. In addition to the own reference relations, you can also specify in Customizing which data (contracts and conditions) the purchasing organization has access to. Cannot have multi-level reference relationship. Since the reference reference organization is considered as a normal purchasing organization, the vendor master record for the purchasing process can also be maintained for the reference purchasing organization.
4. Define purchasing group
Concept and Function Description
Buyers perform the activities of the purchasing organization. Each buyer or each group of buyers is assigned the code - Purchasing Group. The buyer group is responsible for the procurement of a material or a type of material internally, and is responsible for providing contacts with suppliers externally. However, a purchasing group is neither assigned to a purchasing organization nor to a plant. Therefore, the Purchasing group can be used by all purchasing organizations and all plants, if not restricted by the rights management function.
Business example
Create H01, H02, H03 procurement group
configuration steps
Summarize the relationship between evaluation level, company, factory, inventory location, purchasing organization, and purchasing group
A plant must always be assigned to a company code. However, one company code can include several plants.
Multiple storage locations that manage material stock can belong to a plant. But a plant is assigned at least one storage location.
A purchasing organization can be responsible for one or more plants. However, multiple purchasing organizations can be assigned to a plant.
For example:
• A local purchasing organization, a cross-plant purchasing organization, and a cross-company code purchasing organization
• Two purchasing organizations with different work center action settings, such as purchasing materials and purchasing services
A purchasing organization can be assigned to a company code. However, you can use a purchasing organization that is not assigned to any company code (for example, Central Purchasing).
A purchasing organization can be responsible for one or more plants.
Purchasing groups are neither assigned to purchasing organizations nor factories. Therefore, purchasing groups can be used by all purchasing organizations and all factories unless restricted by the rights management function.
The valuation level can be a single plant, as shown, or it can include all plants of a company code.
1. Set evaluation level, define/assign factory
Concept and function description
Evaluation scope: It is an organizational unit in logistics, used to divide enterprises to achieve unified and complete evaluation of material inventory.
You define the scope of valuation by specifying the level at which items are to be valuated. This specification applies to the entire client.
Option One: Valuation Scope = Company Code:
Material valuation data is created for each company code. Price control and prices for materials are applied per company code. Therefore, the materials of all plants belonging to a company code are valuated together.
Option Two: Valuation Scope = Plant:
Material valuation data is created for each plant. Price control and prices for materials are applied per plant. Therefore, the same material in different plants can be valued differently.
In a production system, it is not possible to simply switch the scope of evaluation from plant to company code and vice versa. In this case, existing data must be converted.
For Production Planning (PP) and Product Costing, the Plant Valuation level is mandatory. The same applies if your system is a mySAP retail system.
Remarks: Most projects generally choose option 2: Evaluation scope = factory
Factory: It is an organizational unit in logistics, which subdivides the enterprise from the perspective of production, procurement, maintenance and material planning.
A plant is an operating unit or branch in a company that has the following characteristics:
• Only one business area is assigned to a plant and a product group.
• A plant can be assigned to several sales organization/distribution channel combinations.
• A plant can have multiple shipping locations. A transshipment location can be assigned to multiple plants.
• A factory has an address and language, and belongs to a country.
• The plant has its own material master data. In particular, you can maintain plant-level data for the following material master record views: MRP, Purchasing, Inventory, Work Planning, Production Resources/Tools, Forecasting, Quality Management, Sales and Distribution, Costing.
• A plant must always be assigned to a company code. However, one company code can include several plants.
Business example
Set the factory level evaluation scope and create a P755 factory as an example.
Configuration Steps
Configuration 1:
Configuration 2:
Save and pop up the following maintenance interface.
Like a company, each factory has its own name, address, communication method and other detailed data, which can be maintained in the above picture.
After saving the definition of the factory is completed.
Configuration 3:
Assign the factory defined in configuration 2 to the corresponding company.
2. Define the stocking location
Conceptual and functional description
Storage location codes must be unique within a plant. This means that you can use the same storage location in each plant. You can thus define storage location codes according to their functionality and set up a uniform storage location structure for all plants.
You can maintain one or more addresses for each storage location. These addresses can be different from the factory address. If you maintain a storage location address and specify this storage address in the purchase order, the associated address is exported as the delivery address.
Business example
Add W001, W002, W003 inventory location for factory B755.
Configuration steps
After saving, one or more addresses can be maintained for each storage location.
For example, maintain the following 001 as an example
3. Define/Assign Purchasing Organization
Concept and Function Explanation
Purchasing Organization: It is an organizational unit in logistics, which divides enterprises into subdivisions according to different procurement requirements. The purchasing organization purchases materials or services, negotiates purchase terms with suppliers, and sets responsibility for these operations.
A purchasing organization can be assigned to a company code. After you assign a purchasing organization to a company code, you can assign it only to the plants of the company code. Therefore, if it is the central purchasing department of the company group (as the purchasing organization), it is not assigned to the company code.
• Each purchasing organization (in the standard SAP system) has its own information records and pricing conditions.
• Each purchasing organization has its own supplier master data (only purchasing data and partner roles).
• Each purchasing organization independently evaluates its own suppliers using the MM supplier evaluation function.
• Each purchasing organization can be granted authority to handle relevant purchasing transactions.
• All purchasing document items (such as RFQs, POs, contracts, or scheduling agreements) are assigned to the same purchasing organization.
• Purchasing Organization is the highest summary level of purchasing statistics after the Client Organization level
• Purchasing Organization is used as selection criteria for all purchasing document lists.
Business example
Define purchasing organization B755, assign to factory P755, and use it as factory P755 standard purchasing organization.
Configuration steps
Configuration 1
Save to complete the definition.
In configuration 2
, if you assign the purchasing organization to a company code, you can only assign it to the factory of the company code in configuration 3. Considering the centralized purchasing business in the future, that is, one purchasing organization can serve multiple companies, here is no to configure.
Configuration 3
Purchasing organization must be assigned to a factory before it can perform purchasing business for the factory.
Configuration 4
Standard Purchasing Organization: If multiple purchasing organizations purchase for a specific plant, you can designate one of them as the standard purchasing organization for pipeline resource procurement, consignment, and stock transfer transactions. The system then automatically acquires this standard purchasing organization during source determination for stock transfers and consignments. When consignment and shipment of pipeline resource materials, the purchase information record of the standard purchase organization will be read. At the same time, the purchasing info records of these standard purchasing organizations are applied to evaluate the goods receipt when the purchase order is automatically created by goods receipt posting.
Configuration 5
Reference purchasing organization: You can use the reference purchasing organization to facilitate procurement transactions across purchasing organizations. Thus, you can approve multiple favorable conditions and use centralized approval contracts based on larger purchase quantities, or you can simplify the maintenance process of conditions.
Other purchasing organizations may use the conditions of the reference purchasing organization for pricing purposes. Similarly, multiple purchasing organizations are allowed to access the contracts of a specific reference purchasing organization. In addition to the own reference relations, you can also specify in Customizing which data (contracts and conditions) the purchasing organization has access to. Cannot have multi-level reference relationship. Since the reference reference organization is considered as a normal purchasing organization, the vendor master record for the purchasing process can also be maintained for the reference purchasing organization.
4. Define purchasing group
Concept and Function Description
Buyers perform the activities of the purchasing organization. Each buyer or each group of buyers is assigned the code - Purchasing Group. The buyer group is responsible for the procurement of a material or a type of material internally, and is responsible for providing contacts with suppliers externally. However, a purchasing group is neither assigned to a purchasing organization nor to a plant. Therefore, the Purchasing group can be used by all purchasing organizations and all plants, if not restricted by the rights management function.
Business example
Create H01, H02, H03 procurement group
configuration steps
Summarize the relationship between evaluation level, company, factory, inventory location, purchasing organization, and purchasing group
A plant must always be assigned to a company code. However, one company code can include several plants.
Multiple storage locations that manage material stock can belong to a plant. But a plant is assigned at least one storage location.
A purchasing organization can be responsible for one or more plants. However, multiple purchasing organizations can be assigned to a plant.
For example:
• A local purchasing organization, a cross-plant purchasing organization, and a cross-company code purchasing organization
• Two purchasing organizations with different work center action settings, such as purchasing materials and purchasing services
A purchasing organization can be assigned to a company code. However, you can use a purchasing organization that is not assigned to any company code (for example, Central Purchasing).
A purchasing organization can be responsible for one or more plants.
Purchasing groups are neither assigned to purchasing organizations nor factories. Therefore, purchasing groups can be used by all purchasing organizations and all factories unless restricted by the rights management function.
The valuation level can be a single plant, as shown, or it can include all plants of a company code.