Sap organisation structure_document_kfa_final (1)

SAP Organization Structure Document

Project KINGSAP

Implementation of Airline Office

at Kingfisher Airlines

SAP Organisation StructureSAP Organisation Structure KINGFISHER AIRLINESKINGFISHER AIRLINES

Version 1.0

November 2006

Prepared By Abhay Lambore, IBMChecked By Anupam Sabherwal, IBM Accepted By Umesh Rindani, KINGFISHER AIRLINES

SignatureDate

** KINGFISHER AIRLINES / IBM Confidential

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Document Control

DOCUMENT INFORMATION

Title SAP Organisation Structure Document

Project Phase Business Blueprint

Author Abhay Lambore, Vipin Kothari & Ketan D. Jog IBM

File Name document.doc

Path /tt/file_convert/58ef511f1a28abb4768b45b9/document.doc

Created on Thursday, 28 December 2006

Last Edited on Friday, 19 February 2016

Reviewed by Anupam Sabherwal, IBM

Document Number

REVISION HISTORY

VersionNo.

IssueDate

Change Details Approved by Authorised by

1.0 New ReleaseAnupam

Sabherwal, IBMAnupam Sabherwal,

IBM

TARGET READERS

KINGFISHER AIRLINES Project Manager

KINGFISHER AIRLINES and IBM Project Team

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Index

DOCUMENT CONTROL............................................................................................2

1 INTRODUCTION..............................................................................4

2 ORGANISATIONAL UNITS IN SAP.....................................................4

3 KEY DRIVERS.................................................................................5

4 ORGANISATIONAL STRUCTURE DEFINITION FOR KINGFISHER AIRLINES............................................................................................6

5 MODULE WISE SAP ORGANISATION STRUCTURE...............................7

5.1 FINANCIAL MANAGEMENT & CONTROLLING.....................................7

5.1.1 COMPANY CODE.........................................................................7

5.1.2 COMPANY..................................................................................8

5.1.3 CHART OF ACCOUNTS.................................................................9

5.1.4 CHART OF DEPRECIATION...........................................................9

5.1.5 BUSINESS AREA.......................................................................10

5.1.6 OPERATING CONCERN...............................................................10

5.1.7 CONTROLLING AREA.................................................................11

5.1.8 COST CENTERS.........................................................................11

APPENDIX – 1: Cost Center HierarchyAPPENDIX – 1: Cost Center Hierarchy.........................................................................12

5.2 MATERIAL MANAGEMENT.............................................................12

5.2.1 PLANT.....................................................................................13

5.2.2 STORAGE LOCATION.................................................................13

5.2.3 PURCHASE ORGANIZATION.......................................................16

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5.2.4 Purchasing Group.......................................................................................17

1 Introduction(The SAP organisational data structures (SAP hierarchy) form the “backbone” of the SAP system and are “linked” to every transaction and master data elements in the SAP system.) The result is that the SAP organisational data structure provides the translation of the Organization Structure, Reporting Requirements and Process Environment of the organization where SAP is being implemented.

(SAP has flexible reporting tools and can extract data in a variety of different ways for management reporting.) The system is dependent upon the most appropriate organisation structure being built as foundation for the support of data entry, reporting and management.

The objectives of the SAP organisation structure is to: Organise the system to mirror the business organisation (current and future) Report using this structure, for monitoring the effectiveness of the organisation Adapt to a changing business by building the most flexible structure possible.

The Organization structure is central to the SAP software and there is no standard feature within SAP to allow data to be changed to a new structure once it has been posted to the system. Changes to the structure can only be achieved using conversion programs. This process is very complex and requires a major investment in terms of time and skilled SAP technical resources. Changes will likely result in significant modifications to documentation, user manuals, training materials, scripts etc. Therefore it is critical to consider the future vision of the organization before finalizing the organization structure in SAP.

2 Organisational Units in SAP Different types of organizational units are available in the R/3 System to represent enterprise structures in the system.

The R/3 System (Client)

Operating Concern

Controlling area

Company

Company code

Plant

Business Area

When we implement the system, we must set up as many organizational units as we need. We then map the enterprise structures to the organizational units.

Mapping the organizational units to the R/3 organizational units could look like this, for example:

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Business Structure Elements R/3 organizational units

Enterprise The R/3 System

Company Operating Concern

Controlling area

Company code

Business location Plant

A central R/3 System is set up for the enterprise in which all the functions for Accounting and Logistics are mapped

Reporting Reports and evaluations created in R/3 are generally structured by organizational unit.

When we define the organizational structure, we must bear in mind that the different organizational units in R/3 provide very different reporting options.

Reports on these elementsAre based on:

Company codes External reporting requirements (balance sheet, profit and loss statements)

Controlling areas Cost structure of the enterprise subgroups.

3 Key Drivers

The key drivers that influence how the SAP Organisational Data Structures need to be defined are as follows:

I. Strategic Vision of the Organization Strategic vision and operational vision of the company

II. Chart of Accounts - To support the movement to a common, organisation-wide chart of accounts

III. User Entry Difficulty - The impact on the end users’ ability to input data in the system or to view or extract data from the system. Maximization of system functionality and ease-of-use.

IV. Legal Entity Reporting Capabilities - To provide the ability to meet legal reporting requirements

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V. Management Reporting Capabilities - To support internal management reporting Locally Unit wise and Organisation-wide

VI. Master Record Maintenance - The impact on the volume and complexity of master record creation and maintenance

VII. SAP Recommended Approach - The consistency with SAP’s recommended approach for utilization of the SAP hierarchy elements in order to effectively utilize current and future functionality within SAP.

VIII. Maintenance - Minimization of the system maintenance requirements both for day-to-day operation and for future evolution of the business.

4 Organisational Structure Definition for KINGFISHER AIRLINES

The purpose of this document is to explain the final recommendation for the SAP Organisational Structure and the codification logic for the organisational elements to be used in KINGFISHER AIRLINES.

The current organisation structure was the starting point for this design of the SAP Organisation Structure. As a result of understanding how the different Business Lines operate and interact in KINGFISHER AIRLINES, following SAP Organisation Structure is considered:

SAP Entity Kingfisher AirlinesOperating Concern One Op Concern Controlling Area One Controlling Area Company Code One Company CodePlant One for Central Warehouse and one for all Airport

StationsBusiness Area One Business Area for Airline Business but this can be

increased in future based on requirements of additional lines of business e.g. Cargo etc

All the options were evaluated in depth by IBM consultants and Kingfisher Airlines core team.

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5 Module wise SAP Organisation Structure

5.1 Financial Management & ControllingThe FI module handles the financial transactions for the organisation. It consists of General Ledger, Accounts Payable, Accounts Receivable and Asset Accounting. The central task of G/L accounting is to provide a comprehensive picture of external accounting and accounts. Recording all business transactions (primary postings as well as settlements from internal accounting) in a software system that is fully integrated with all the other operational areas of a company ensures that the accounting data is always complete and accurate. Balance sheet is traditionally produced from this module in SAP, as this is where the legal entity is registered.

The CO module handles the cost and profitability accounting for the organization. It consists of Cost Center Accounting, Internal Order Accounting and Profitability Analysis. The controlling module specifically caters to internal management reporting requirements on areas of cost analysis and control, evaluating profitability of business segments, variance analysis and budgeting.

The key organization elements being used in FI in Kingfisher Airlines are:

Company Company Code Chart of Accounts Chart of Depreciation Business Area

The key organization elements being used in CO in Kingfisher Airlines are:

Operating Concern Controlling Area Cost Center

5.1.1 Company CodeSAP Definition

Company Code represents a legal entity that requires a complete set of financial statements including balance sheet. The Company Code is the key building block upon which all Enterprise Units depend.

Assignments like home country, fiscal year, chart of accounts, currency and language are defined for a company code.

Periods, postings, currencies, document types, number ranges and master data need to be maintained at the company code level. Creating many company codes for a single legal entity entails significant increase in master data and the need to perform additional maintenance.

Transactional processing between Company codes requires that affiliates be set up as customers & vendors to initiate inter-company stock transfers and perform related inter-company eliminations. Creating many company codes for a single legal entity results in increased adjustments to the books, unnecessary eliminations, and reporting of inter-company profits.

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Design Rationale

In KINGFISHER AIRLINES, company code will be defined at the level at which a complete set of financial statements (including the balance sheet and profit and loss statements) are required. The company code structure in KINGFISHER AIRLINES will be designed to meet the following:

A structure which is easily consolidated to meet external reporting A structure that can easily provide the desired internal reporting and controls.

Codification Logic

In SAP, Company code is a 4 digit alphanumeric code.

In case of KINGFISHER AIRLINES the following codification logic has been adopted. The code will be four digit numeric.

Sl. No. Company Code Description1 1000 Kingfisher Airlines

Assignments

Company code defined in SAP will be assigned to a Company and Controlling area.

Many company codes can be assigned to the same company. All company codes within a company should follow the same transaction chart of accounts and the same fiscal year breakdown.

All company codes for which common cost controlling is to be carried out are assigned to the same controlling area.

The proposed assignment of Company Code to Company and Controlling Area is given below:

Sl. No.

Company Code Company Controlling Area

1 1000KINGFISHER AIRLINES

1000

5.1.2 Company SAP Definition

A Company is an organizational unit in accounting that represents a business organization according to the requirements of commercial law in a particular country.Basic data for each company is stored in the company definition. In the SAP system, consolidation functions in financial accounting are based on companies. A company can comprise one or more company codes.

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Companies must be catalogued in a list of company IDs that is consistent across the group. The parent company usually provides this list of company IDs.

It is also acceptable to designate legally dependent branches 'companies' and join them together as a legal unit by consolidation.

Design Rationale

In KINGFISHER AIRLINES, company code is assigned a company ID.

Codification Logic

In SAP, the Company ID is four digit alpha numeric code.

In case of KINGFISHER AIRLINES, the Company ID code is same as that of company code.

Sl. No. Company ID Description1 1000 Kingfisher Airlines

5.1.3 Chart of AccountsSAP Definition

Chart of Accounts is the highest level at which financial accounting information can be consolidated. All G/L accounts must be assigned to a Chart of Accounts.

Design Rationale

All Business Lines of KINGFISHER AIRLINES will follow a uniform chart of accounts.

In KINGFISHER AIRLINES, 1000 will be the chart of accounts. Company code will be assigned to the same chart of accounts.

Sl. No. Chart of Accounts Description1 1000 KINGFISHER AIRLINES Chart of Accounts

5.1.4 Chart of DepreciationSAP Definition

A Chart of depreciation is provided in order to manage various legal requirements for depreciation and valuation of asset. A Chart of depreciation is defined independently of other organizational units,Company codes in countries with the same valuation rules or company codes in the same industry sector generally use the same chart of depreciation.

Design Rationale

There will be only one chart of depreciation called 1000 defined for KINGFISHER AIRLINES.

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Sl. No.

Chart Of Depreciation Description

1 1000 KINGFISHER AIRLINES Chart of Depreciation

Assignments

Chart of depreciation is assigned to a company code. All company codes following the same rules for depreciation can have the same chart of depreciation assigned to them.

5.1.5 Business AreaSAP Definition

Business areas are used in external segment reporting (over and above company codes) based on the significant areas of operation (for example, product lines) of a business enterprise.

Design Rationale

At present there is only one Business Area for Airline Business however this can be increased in future based on the requirements if any for separate lines of business e.g. Cargo etc.

Sl. No.

Business Area Description

1 1000 AIRLINES Business

Assignments

The system determines the appropriate business area from information such as the material, plant, or cost center which is entered during the business transaction.

5.1.6 Operating ConcernSAP Definition

Operating Concern is a representation of a part of an organization for which the sales market is structured in a uniform manner.

By setting off the costs against the revenues, an operating profit can be calculated for the individual market segments that are defined by a combination of classifying characteristics (such as product group, customer group, country, or distribution channel). The market segments are called profitability segments.

Multiple controlling areas can be assigned to one operating concern

Design Rationale

There will be one operating concern called 1000 defined for KINGFISHER AIRLINES. Controlling Area 1000 will be assigned to this Operating Concern.

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Sl. No. Operating Concern ID Description1 1000 Kingfisher Airlines Op Concern

5.1.7 Controlling AreaSAP Definition

The Controlling Area is an organizational unit delimiting the organization's managerial accounting operations. Generally, a n:1 relationship exists between the Company Code and the Controlling Area. A Controlling Area can also incorporate several Company Codes to take cross-company cost allocations into account. These Company Codes must all use the same operational Chart of Accounts. All inter-organizational allocations refer only to objects in the same Controlling Area.

Internal business transactions are reflected in the controlling area. Primary costs are transferred from external accounting and classified by managerial accounting perspectives. If the primary costs are direct costs, they are assigned directly to cost objects; if they are indirect costs, they are assigned to cost centers or internal orders and assigned further using internal allocation methods.

Design Rationale

There will be one controlling area called 1000 defined for KINGFISHER AIRLINES. Company code1000 will be assigned to this controlling area.

Sl. No. Controlling Area ID Description1 1000 Kingfisher Airlines Ltd

5.1.8 Cost CentersSAP Definition

A Cost center is an organizational unit in a Controlling Area representing a clearly delimited location where costs occur. The organizational Business Lines can be made on the basis of functional, location wise or responsibility-related standpoints.

Cost centers are used for differentiated assignment of overhead costs to sales activities (cost calculation functions) and in order to carry out differentiated controlling of costs occurring in an organization (cost controlling function).

For the purposes of Overhead Cost Controlling, the cost centers are grouped together in decision, control, and responsibility units. This structure is reflected in the Cost Center Accounting (CO-OM-CCA) application component. A hierarchical cost center structure will be defined in SAP to reflect cost centre groups and cost roll ups therein.

Design Rationale

In KINGFISHER AIRLINES, the lowest unit at which it is desired to control costs will be created as a cost centre. There will be a single cost centre hierarchy created to report

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costs for the entire corporation. Cost centre groups will be created to report costs collectively for a group of cost centers. In the lowest unit at which it is desired to control costs will be created as a cost centre. Cost centre groups will be created to report costs collectively for a group of cost centers. The list of cost centers for KINGFISHER AIRLINES and hierarchical assignments is provided as Annexure 1.

COST CENTER GROUP & COST CENTER NUMBER LOGIC

Different number ranges have been used for different functions and geography.

Function Number Range Region 10 to 40Aircraft 90Airports 101 to 150 (e.g. for Northern Region)Offices 151 to 199 (e.g. for Northern Region)Aircraft Types 901 to 904Cost Centers 10101 to 49999 for departments &

90101 to 90499 for Tail numbers

For detailed information on number logic, please refer to the KDS document.

Only numeric codes have been used for Cost centers as well as for Cost center Groups. The cost center Hierarchy is attached.

ANNEXURE 1: Cost Center HierarchyANNEXURE 1: Cost Center Hierarchy

5.2 Material ManagementThe MM module handles the Materials Management transactions for the organization. It consists of Consumption based planning, Purchasing, External service management, Inventory management, Vendor evaluation etc.

The key organization elements being used in MM in KINGFISHER AIRLINES are:

Plant Purchasing Organization Storage Location

5.2.1 PlantSAP Definition

The plant is an operating area or branch within a company.

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sapevent:DOCU_LINK/GL:plant


A plant has its own material master data. Data can be maintained at plant level for the following views on a material master record in particular: Purchasing, Storage, Work scheduling, Sales, Costing.

Design Rationale

In KINGFISHER AIRLINES, Plants will be created one for Central Warehouse and one for all airport stations.

Codification Logic

In SAP, Plant is a four digit alphanumeric code.

In case of KINGFISHER AIRLINES, Plant code will be four digit numeric.

Assignments

The codification logic for Plants and assignments to Company Codes is as follows:

Company Code

Plant Code

Plant Description Remarks

1000 1000 Kingfisher Airlines Central Warehouse

Central warehouse at Mumbai

1000 2000 Airport Offices All Airport Stations into one Plant

5.2.2 Storage LocationSAP Definition

A storage location is the place where stock is physically kept within a plant.

A storage location has the following attributes:

There may be one or more storage locations within a plant.

A storage location has a description and at least one address.

It is possible to store material data specific to a storage location.

Stocks are managed only on a quantity basis and not on a value basis at storage location level.

Physical inventories are carried out at storage location level.

Storage locations are always created for a plant.

Design Rationale

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sapevent:DOCU_LINK/DS:GLOS.3526BEADAFAB52B9E10000009B38F974


In KINGFISHER AIRLINES, Storage locations will be one below Head Office Plant and each Airport station as one storage location under Airport Office Plant.

Codification Logic

In SAP, Storage Location is a four digit alphanumeric code.

In case of KINGFISHER AIRLINES the codification logic for Storage locations is as follows:

The codes will be four digit numeric.

Storage Location Code Description1001 Central Warehouse Store Location1010 Mumbai –Catering Unit1020 Delhi – Catering Unit1030 Bangalore – Catering Unit1040 Chennai – Catering Unit1050 Hyderabad – Catering Unit1060 Pune – Catering Unit1070 Jaipur – Catering Unit1080 Ahmedabad – Catering Unit1090 Guwahati – Catering Unit2001 Mumbai Airport Store2002 Delhi Airport Store2003 Bangalore Airport Store2004 Hyderabad Airport Store2005 Pune Airport Store2006 Chennai Airport Store2007 Kolkata Airport Store2008 Bhubaneswar Airport Store2009 Agartala Airport Store2010 Ahmedabad Airport Store2011 Guwahati Airport Store2012 Goa Airport Store2013 Coimbatore Airport Store2014 Jammu Airport Store2015 Dibrugarh Airport Store2016 Jaipur Airport Store2017 Kochi Airport Store2018 Mangalore Airport Store2019 Nagpur Airport Store2020 Srinagar Airport Store2021 Varanasi Airport Store2022 Vijaywada Airport Store2023 Vishakhapatnam Airport Store

Assignments

Storage Locations will be created for plants.

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Plant Code

Plant Description Storage Location Code

Description

1000 Central Warehouse- Mumbai

1001 Central WarehouseStore Location

1010 Mumbai –Catering Unit1020 Delhi – Catering Unit1030 Bangalore – Catering Unit1040 Chennai – Catering Unit1050 Hyderabad – Catering Unit1060 Pune – Catering Unit1070 Jaipur – Catering Unit1080 Ahmedabad – Catering Unit1090 Guwahati – Catering Unit

2000 Airport Station 2001 Mumbai Airport Store2002 Delhi Airport Store2003 Bangalore Airport Store2004 Hyderabad Airport Store2005 Pune Airport Store2006 Chennai Airport Store2007 Kolkata Airport Store2008 Bhubaneswar Airport Store2009 Agartala Airport Store2010 Ahmedabad Airport Store2011 Guwahati Airport Store2012 Goa Airport Store2013 Coimbatore Airport Store2014 Jammu Airport Store2015 Dibrugarh Airport Store2016 Jaipur Airport Store2017 Kochi Airport Store2018 Mangalore Airport Store2019 Nagpur Airport Store2020 Srinagar Airport Store2021 Varanasi Airport Store2022 Vijaywada Airport Store2023 Vishakhapatnam Airport Store

5.2.3 Purchase Organization SAP Definition

From the Materials Management and Purchasing view, the purchasing organization is responsible for all purchasing activities (including the processing of requests for quotations and purchase orders, for example).

Possible organizational forms

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sapevent:DOCU_LINK/DS:GLOS.3526BFD3AFAB52B9E10000009B38F974


Purchasing function can be organized in the following ways:

Corporate-group-wide purchasing

Company-specific purchasing

Plant-specific purchasing

All of these forms can co-exist within a single client.

Corporate-group-wide purchasing:

A purchasing organization is responsible for the purchasing activities of different company codes. In this case, company code is not assigned to the purchasing organization, but company code concerned for each individual purchasing transaction is specified. Plants from different company codes are assigned to the purchasing organization.

Company-specific purchasing:

A purchasing organization is responsible for the purchasing activities of just one company code. In this case, company code is assigned to the purchasing organization. The purchasing organization may procure only for this company code. Plants of the company code concerned only are assigned to the purchasing organization.

Plant-specific purchasing:

A purchasing organization is responsible for the purchasing activities of one plant. In this case, the Plant and the company code of the plant is assigned to the purchasing organization. The purchasing organization may procure for this plant only.

Note

If the work involves the mixture of the above organizational forms, in that case reference purchasing organization is of significance.

It is possible to allow one purchasing organization to access the contracts and conditions of another - also-called reference purchasing organization. This makes it possible for advantageous terms negotiated by one purchasing organization to also be used by other purchasing organizations.

Design Rationale

In KINGFISHER AIRLINES, Purchasing Organization will be responsible for purchasing activities for all the plants.

Codification Logic

In SAP, Purchase Organization is a four digit alphanumeric code.

In case of KINGFISHER AIRLINES codes will be four-digit numeric. The codification logic for Purchasing Organization is as follows:

Purchase Orgn. Code Purchase Organisation Description1000 KINGFISHER AIRLINES Purchasing Organisation

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Assignments

Purchase Organization will be assigned to all the Plants which will require purchasing via that purchase organization. Assignments are as shown below:

Purchasing Organization

Purchasing Organization Description

Plant Code Plant Description

1000 KINGFISHER AIRLINES Purchasing Organisation

1000 Central Warehouse2000 Airport Offices

5.2.4 Purchasing GroupSAP Definition

A key for a buyer or group of buyers responsible for certain purchasing activities.

The purchasing group is:

Internally responsible for the procurement of a material or a class of materials

The principal channel for a company's dealings with its vendors

Design Rationale

In KINGFISHER AIRLINES, purchasing groups will be defined as per the area of activities by different purchasers like material purchase, service purchase etc.

Codification Logic

In SAP, Purchasing Group is three digit alphanumeric codes.

In case of KINGFISHER AIRLINES the codification logic for Purchasing Group is as follows:

The codes will be a three digit numeric

Purchasing Group Code

Description

101 Inflght&Categ Matl102 Ops Matls103 Non-Stk Matls104 Catering services201 Admin Hotel Srv202 Admin TeleComn203 Admin Lease Accom204 Admin CAPEX205 Admin Other301 IT Assets Purch302 IT Consumable Purch303 IT Service Purch401 Mktg Brand Purch402 Mktg Activity Purc

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Purchasing Group Code

Description

403 Mktg Other501 Import Purchases601 Aircraft Fuel Pur

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