01enterprise Structure

SAP MM Interview Questions and Answers by SIDDU
ENTERPRISE STRUCTURE
Enterprise Structure Configuration

MM enterprise structure
Company Code: Legal entity from which financial statements are generated.
Purchasing Organization: An organizational unit responsible for procuring
materials and services and agrees on terms and conditions of purchase with
vendors negotiating terms for purchases, incoterms, pricing, payment terms, etc.
Purchase group: Group of employees responsible for executing the purchasing
activities for certain products and plants.
Plant: An operating unit for production and MRP or simply a grouping of one or
several locations with stocks of material (storage locations) those are
geographically close to one another. Plant can be manufacturing facilities,
distribution centers or warehouses.
Storage location: A subdivision of a plant where materials are stored.
Define valuation level

BACKGROUND
Page 1 of 17 Enterprise Structure

This configuration setting enables to define at which level the stock are to be valuated in
SAP.
Stocks can be valuated at following two levels in SAP.
 Plant level
 Company code level
It is recommended to keep at plant level. This is a client level setting.
INSTRUCTIONS
Follow the Menu Path: IMG  Enterprise structure  Definition  Logistics -

General  Define valuation level
1. Click §
§
2.
2. S
e
l
e
c
t
the radio button §
3. Click Save §
Define Plant
BACKGROUND

This configuration setting enables to define the plant. Each manufacturing facility or
branch of a company is defined as a plant in SAP.
Plant is assigned to the company code.
Storage locations are created under each plant.
If the valuation level is the plant, the stocks are valuated at plant level.
Note: - It is common practice to copy plan from the existing defined plant. It will be
defined by the FI.
INSTRUCTIONS

General  Define copy, delete, check plant
1. Click §
§
2.
2. C
l
i
c
k

§
3. C
l
i
c
k

§
4. Click §
§
5. Enter from plant

as 0001 to copy
from SAP
defined plant

6. Enter To Plant – E.g. IND6
7. Click §
8. Click § to return to main menu.
Note: - Definition of plant and assignment of plant to the company codes along with
relevant GL accounts is done by the FI team. However the creation of plant is
demonstrated.
Maintain plant details and Factory calendar in Plant

BACKGROUND
When copying the plant, the entire details will be copied from the source plant.
Address of the plant and other details attached to the plant can be changed.
INSTRUCTIONS

General  Define copy, delete, check plant
1. Double click §
2. Select plant IND6 by clicking the grey box in the left side
3. Click §
4. Click §
5. Maintain the entire address, contact details of the plant.
6. Factory calendar must be attached to the plant
Below screen shows the details of plant settings.

Defin
e Loca
tion
BACKGROUND
This configuration setting enables to define the location. Location indicates where the
materials are stored inside the plant.
INSTRUCTIONS

General  Define Location
1. Click §
2. Click §
3. Update required and optional fields:

Field Name Description Value

Plant Name of the plant e.g. IND6
Location Location identification E.g. PROD
Name Description of the location Production location
4. Click §
Note: - Maintain the address of the location in the subsequent screen.
§
5. Enter title as Company
6. Enter country
7. Click §

Click§.
Maintain Storage Location
BACKGROUND
This configuration setting enables to define the physical storage location. This will
indicate where the stocks are stored physically inside the plant.
Each item must have storage location. One material can be stored in many storage
locations.
Storage locations can be assigned to the warehouse through warehouse management.
INSTRUCTIONS
Follow the Menu Path: IMG  Enterprise structure  Definition  Materials

Management Maintain storage location
Click §
§
Enter the plant

where the
storage location
is to be created.
E.g. IND6
Click §
Click §
Enter Storage location
Enter description of the storage location
Click §
§
Select the
storage
location

Double Click §
Enter the sequential number 1
Click §
Select the
sequence
number
Click §

§
Maintain the address.
Click §
Click §
Repeat the above to maintain the address for all storage

locations.
Maintain Purchase organization

BACKGROUND
This configuration setting enables to define the purchase organization.
Purchase organization is the part of the enterprise structure from MM point of view. It
represents the responsibilities to
 Procure materials and services

 Negotiation with vendor
Purchase organization is assigned to the company codes and plants. Following are the
possibilities of assignments.
 One purchase organization to many company codes

 One purchase organization to one company code
 One purchase organization to one plant
Note: - It must be assigned to plant.
INSTRUCTIONS
Follow the Menu Path: IMG  Enterprise structure  Definition  Materials

Management  Maintain purchase organization

1. Click §
§
2.
2.
2.
2.
2.
2.
2.
click §
3. Update the following fields
Field Name Description

Purch.organization Key identifying the purchase organization.
E.g. IND6
Purch.org.descr. Description of the purchase organization.
E.g. For plant IND6
4. Click §.
Assign Plant to company

BACKGROUND
This configuration setting enables to assign plant to the company code.
INSTRUCTIONS
Follow the Menu Path: IMG  Enterprise structure  Assignment  Logistics –

General  Assign plant to company code
1. Click §
2. Select the desired company code by clicking the cursor on it.
3. Click §
4. Select the plant from the display
5. Click §
6. Click §.

Assign purchase organization to the company code

BACKGROUND
This configuration setting enables to assign the purchase organization to a company code.
INSTRUCTIONS
Follow the Menu Path: IMG  Enterprise structure  Assignment  Materials

Management  Assign purchase organization to company code
1. Click §
2. Select the desired company code by clicking the cursor on it.
3. Click §
4. Select the purchase organization
5. Click §
6. Click §
Assign purchase organization to plant

BACKGROUND
This configuration setting enables to assign the purchase organization to a plant.
INSTRUCTIONS
Follow the Menu Path: IMG  Enterprise structure  Assignment  Materials

Management  Assign purchase organization to plant
1. Click §
2. Select the desired plant by clicking the cursor on it.
3. Click §
4. Select the purchase organization
5. Click §
6. Click §

All right guys, not much about MM organization structure. Now we shall look into
material master related to configurations.
Enterprise Structure Question and Answer’s
1. What is meant by a Client in the SAP R/3 system?
A: Client is a commercial organizational unit within the R/3 system with its own
data, master records & set of tables. From the business perspective client forms
the corporate group.
2. Define plant?
A: An operating unit for production and MRP or simply a grouping of one or several
locations with stocks of material (storage locations) those are geographically close
to one another.
3. Define purchase organization?
A: Organizational unit which procures materials and services and agrees on terms
and conditions of purchase with vendors.
4. How many plants can a purchase organization service?
A: Multiple plants
5. Are purchasing groups actually assigned to purchasing organization?
A: No. A purchasing group is assigned to a material at the plant level.
6. Can several companies use the same chart of accounts?
A: Yes.
7. At what level is the standard chart of accounts defined?
A: Client.
8. What is business area?
A: A special economic unit for which an internal balance sheet and P&L statement
can be created. A business area is defined independently of company code. You
specify how you wish business area for each sales area to be determined – either
by plant and division or by sales area.

9. At what level is the warehouse management system defined?
A: Storage location level.

10. Can storage locations in different plants be managed under one warehouse
number?
A: Yes.
11. At what level of the organization is valuation carried out?
A: Either Plant or Company code.
12. What do you mean by standard purchase organization & reference purchase
organization? Please mention the SPRO navigation for both the purchase
organizations?
A: If several purchase organizations procures material for a plant then you can define
one of them as Standard purchase organization for the transaction “Pipeline
procurement”, “consignment” & “stock transfers”.
Reference purchase organization is the purchase organization whose conditions or
contracts may be access and use by the other purchase organization linked to it.
SPRO Navigation to Define & Assign Standard Purchase Organization:
IMG → Enterprise structure → Definition → Materials Management →

Maintain Purchase Organization
IMG → Enterprise structure → Assignment → Materials Management →

Assign Standard Purchase Organization to plant.
SPRO Navigation to Define & Assign Reference Purchase Organization:

Maintain Purchase Organization
IMG → Enterprise structure → Assignment → Materials Management →

Assign Purchase Organization to Reference Purchase Organization.
13. What are the maximum purchase organizations you can have for an enterprise?
Justify your answer?

A: Enterprise wide purchase org: One purchasing organization procures for all the
company codes of a client.
Company specific purchase org: One purchasing organization procures for one
company code.
Plant specific purchase org: One purchasing organization procures for one plant.
Reference purchasing organization.
Standard purchasing organization.

14. Where do you define and assign storage locations in the enterprise structure?
Mention the SPRO navigation?
A: At plant level the storage locations are defined.

The SPRO Navigation to Define & Assign Storage Locations:
Maintain Storage locations. (At this stage of definition only the system ask for
the plant to assign the storage location. So there is no separate navigation to
assign storage locations to plant)
15. Where do you define purchasing group?
A: The purchasing groups are defined in the IMG activity.

The SPRO Navigation to Create Purchasing Groups:
IMG→ Materials Management → Purchasing → Create Purchasing Groups
16. What is reference purchase organization? Where do you use it?
A: Reference purchase organization is the purchase organization whose conditions or

contracts may be access and use by the other purchase organization linked to it.
17. What is the relevance of controlling area in an enterprise structure?
A: Controlling area is an organizational unit within a company used to represent a

closed system for cost accounting purpose.
A controlling area may include single or multiple company codes that may use
different currencies.
18. Can a purchasing organization be assigned to more than one company code? Can
a purchasing organization service more than one company code? How is this
possible?
A: A purchasing organization can only be assigned to one company code. However if

you would like to have a purchasing organization service more than one company
code, you simply do not assign the purchasing organization to company code.
That way any plant assigned to that purchasing organization, regardless of which
company code the plant belongs to, can create documents for that purchasing
organization.
19. Can a plant function in SAP without a factory calendar assigned to it? Explain?
A: No. the factory calendar provides a holiday calendar, which days are workdays,
and company holidays. This is all used for planning purposes.

20. What is MM enterprise structure? Explain using a simple diagram?
A:
Company Code: Legal entity from which financial statements are generated.
Purchasing Organization: An organizational unit responsible for procuring
materials and services and agrees on terms and conditions of purchase with
vendors negotiating terms for purchases, incoterms, pricing, payment terms, etc.
Purchase group: Group of employees responsible for executing the purchasing
activities for certain products and plants.
Plant: An operating unit for production and MRP or simply a grouping of one or
several locations with stocks of material (storage locations) those are
geographically close to one another. Plant can be manufacturing facilities,
distribution centers or warehouses.
Storage location: A subdivision of a plant where materials are stored.
21. If PP (production planning) is used in the SAP system, at what level of the
organization structure is the valuation level?
A: At the Plant level.
22. What is the relevance of controlling area in an enterprise structure?
A: The controlling area is the business unit where cost accounting is carried out.
Usually there is a 1:1 relationship between the controlling area and company
code. For the purpose of company wide cost accounting one controlling area can
handle cost accounting for several company codes in one enterprise.

23. Explain the concept of cost center? Mention the steps involved in creating a cost
center?
A: An organizational unit within a controlling area that represents a defined location

of cost incurrence.
The definition can be based on:
 Functional requirements
 Allocation criteria
 Physical location
 Responsibility for costs
Steps involved in creating a cost center:
1. Maintain controlling area: IMG → Controlling → General Controlling →
Organization → Maintain Controlling Area.
2. Define Cost Center Categories: IMG → Controlling → Cost Center
Accounting → Master Data → Cost Centers → Define Cost Center
Categories.
3. Define Standard Hierarchy: IMG → Controlling → Cost Center
Accounting → Master Data → Cost Centers → Define Standard
Hierarchy.
4. Create Cost Centers: IMG → Controlling → Cost Center Accounting →
Master Data → Cost Centers → Create Cost Centers.
Note: First three steps mentioned above are the prerequisites to create cost
centers.

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SAP MM Interview Questions and Answers by SIDDU

Enterprise Structure Configuration

Define valuation level

Page 1 of 17 Enterprise Structure

Stocks can be valuated at following two levels in SAP.

It is recommended to keep at plant level. This is a client level setting.

Follow the Menu Path: IMG  Enterprise structure  Definition  Logistics -

the radio button §

Page 2 of 17 Enterprise Structure

Plant is assigned to the company code.

Storage locations are created under each plant.

Follow the Menu Path: IMG  Enterprise structure  Definition  Logistics -

5. Enter from plant

Page 3 of 17 Enterprise Structure

6. Enter To Plant – E.g. IND6

8. Click § to return to main menu.

Maintain plant details and Factory calendar in Plant

Follow the Menu Path: IMG  Enterprise structure  Definition  Logistics -

5. Maintain the entire address, contact details of the plant.

6. Factory calendar must be attached to the plant

Below screen shows the details of plant settings.

Page 4 of 17 Enterprise Structure

Follow the Menu Path: IMG  Enterprise structure  Definition  Logistics -

3. Update required and optional fields:

Page 5 of 17 Enterprise Structure

Field Name Description Value

Note: - Maintain the address of the location in the subsequent screen.

5. Enter title as Company

Page 6 of 17 Enterprise Structure

Storage locations can be assigned to the warehouse through warehouse management.

Follow the Menu Path: IMG  Enterprise structure  Definition  Materials

Enter the plant

Enter Storage location

Enter description of the storage location

Page 7 of 17 Enterprise Structure

Enter the sequential number 1

Page 8 of 17 Enterprise Structure

Maintain the address.

Repeat the above to maintain the address for all storage

Maintain Purchase organization

This configuration setting enables to define the purchase organization.

 Procure materials and services

 One purchase organization to many company codes

Note: - It must be assigned to plant.

Follow the Menu Path: IMG  Enterprise structure  Definition  Materials

Page 9 of 17 Enterprise Structure

3. Update the following fields

Field Name Description

Assign Plant to company

This configuration setting enables to assign plant to the company code.

Follow the Menu Path: IMG  Enterprise structure  Assignment  Logistics –

2. Select the desired company code by clicking the cursor on it.

4. Select the plant from the display

Page 10 of 17 Enterprise Structure

Assign purchase organization to the company code

Follow the Menu Path: IMG  Enterprise structure  Assignment  Materials

2. Select the desired company code by clicking the cursor on it.

4. Select the purchase organization

Assign purchase organization to plant