Question

how is SAP MM module useful in organizations

Answer 1

Organization’s structure, be it the reporting structure mentioned in the organizational chart, departmental structure, reporting hierarchy, signing mandate hierarchy, processes and procedurals structure, is mandatory for smooth processing of business processes. Hence, SAP ERP needs to reflect an organizational structure of a company.

Every module of SAP has its own enterprise structure. Enterprise structure helps in building a hierarchy and structure to streamline the business processes. Before initiating implementation, designing and configuring the actual system, Enterprise Structure is defined in the Business Blueprint Documentation phase. It is an important step to define the organizational structure. It requires thorough analysis of how an organization currently runs and how the business wants to run the company after implementation of SAP.

If an organization is huge, dealing with multiple lines of business, its processes are complex, and it is scattered geographically at different locations, designing and finalizing the Enterprise Structure is a very critical, vital and time taking activity. Several meetings can be called with the Business Process Owners and Subject Matter Experts to finalize the enterprise structure which may also require endorsement and approval from the higher management. Sometimes sign off on SAP enterprise structure is obtained separately during the Business Blueprinting phase.

SAP MM Organizational Structure

In the SAP ERP, several structures can be used to represent the legal and organizational structure of the company. Organizational elements can be structured from the point of view of accounting, human resources and materials management. It is possible to combine these structures. The organizational structures form a framework in which all business transactions can be processed.

Following organizational units represents MM (Materials Management) module:

Company CodePlantStorage LocationPurchasing OrganizationPurchasing Groups

Materials Management module uses some other organizational units which are maintained by other modules in SAP, such as:

Company Code (FI – Financial Accounting module)

The organizational units discussed below are relevant for SAP Material Management (MM) only.