Chapter 3 Organization Structure Global Bike Inc. · GBI must fit its organization structure into this fixed design of the SAP ECC system. Observe the MM units of Plant, Storage Location,

© SAP AG, Revised 2013

ORGANIZATION STRUCTURE

Product SAP ERP G.B.I. Release 6.04 Level Undergraduate Beginner Focus Company Background Authors Simha Magal Stefan Weidner Version 2.11 Revised Roger Hayen

MOTIVATION A general understanding of GBI (the company) prior to embarking on hands-on exercises and case studies in the SAP ERP client is critical for success. This narrative provides a historical background for how GBI began and an overview of its operations and strategy. This information will be used extensively throughout the curriculum material.

PREREQUISITES None. NOTES None.

Chapter 3 Organization Structure Global Bike Inc. Background and overview of GBI srategy and operations organization structure.

© SAP AG, Revised 2013 Page 3 – 2

Chapter 3 ORGANIZATION STRUCTURE

GBI Company History

Task Get to know the company’s history. Time 15 min

Short Description Read the below narrative to learn about the company’s history.

Global Bike Inc. has a pragmatic design philosophy that comes from its deep roots in both the off-road trail racing and long-distance road racing sports. Nearly 20 years ago, its founders designed their first bikes out of necessity—they had races to win and the bikes that were available at the time did not perform to their extremely high standards. So, they took matters into their own hands and built legendary bikes that would outlast and outperform the competition. From these humble origins, Global Bike Incorporated was born and continues to deliver innovative high-performance bicycles to the world’s most demanding riders.

This heritage of entrepreneurial spirit and quest for design perfection is still the cornerstone of GBI’s corporate philosophy. GBI produces bikes for the most demanding competitors—whether the competition is on pavement or dirt, for money, fame or just bragging rights.

John Davis earned his racing scars in the mountain racing circuit in America, where he won numerous downhill and cross-country championships. Early on, John realized that the mass-produced bicycles available were inadequate in many ways for the type of racing he was doing. So, John stripped four of his old bikes down to the bare metal and rebuilt them into a single “Frankenstein” bike that he rode to win the national championship. Once news of his Frankenstein bike got out, John’s friends and even his competitors began asking him to build them a Frankenstein bike too. While recovering from an injury in 1990, John started producing the first series of Frankenstein bikes in his garage—each one custom-built from cannibalized parts from other bikes. As more and more orders came in, John successfully expanded Frankenstein Bikes from his garage operations into a full-blown manufacturing facility in Dallas and began producing custom trail bikes which he sold through a network of specialized bike dealers throughout the country.

At nearly the same time, halfway around the world in Heidelberg, Germany, Peter Schwarz was studying engineering and competing in regional touring races on weekends. In between his races and studies, Peter worked at a bike shop in Heidelberg, fixing student bikes and tuning the touring bikes that he and his friends rode for competitions. As Peter’s reputation as a fierce competitor and mechanical wizard grew, he also began to design and build road bikes based on an ultra-light composite frame that he had created for one of his engineering courses. Peter’s

Notes



innovative use of carbon composite materials allowed him to build a frame that was significantly stronger and one tenth the weight of competing frames. As a student, Peter did not have a great deal of financial resources, so he partnered with a local company that manufactured his frame designs as a contract manufacturer. Soon, Peter’s frames were being used by racers all over Europe and he started Heidelberg Composites to market and design frames which would be fabricated by a contract manufacturer on a larger scale. Heidelberg Composites sold its frames to specialized bike stores throughout Europe and directly to racing teams, eventually becoming the leader in lightweight touring frames in Europe.

Through a twist of fate, Peter and John met each other in 2000 and immediately recognized their mutual passion for performance and complimentary business models. Each had been looking for a partner in another racing field and each had been looking for a partner in a different market. They quickly realized that a merger between their two companies would be extremely synergistic and that the combination of their product lines and regional distribution channels would generate a great deal of efficiencies.

So, in 2001, Heidelberg Composites and Frankenstein Bikes merged to form Global Bike Incorporated. Today, John and Peter share the responsibilities for managing GBI’s growing organization as co-CEO’s. John is responsible for sales, marketing, service & support, IT, finance and human resources groups and Peter is responsible for research, design, procurement and manufacturing groups from an organizational reporting perspective.

Figure 1:

Organizational Chart

However, GBI is a process-centric organization, so John and Peter prefer to think of the processes that they are responsible for, rather than the functional areas of the company that report to them. From this perspective, Peter is responsible for Idea-to-Market and Build-to-Stock and John is responsible for Order-to-Cash and Service & Support, as well as the supporting services for all four key processes. The simple way to look at their responsibilities would be to say that Peter spends money and builds products and John sells products and brings in money.



Figure 2:

Enterprise Process Map



SAP ECC Organization Structure

Task Understand the organization structure available in SAP ECC. Time 5 min

Short Description Examine the organization structure overview diagram below to learn about the organization structure provided by SAP AG. This is a fixed structure and cannot be changed to meet a company’s particular structure.

COControlling

Area

CO

Cost Center

FI

Business Area

SDSales

Organization

SDDistribution

Channel

SD

Sales Area

SD

Division

MMStorageLocation

MM

Plant

MMPurchasing

Organization

ECProfit Center

FICompany Code

GBI must fit its organization structure into this fixed design of the SAP ECC system. Observe the MM units of Plant, Storage Location, and Purchasing Organization. The FI units are the Company Code and Business Area. For SD, the units are Sales Organziation, Distribution Channel, and Division. The combination of those three SD units is a Sales Area.

As you read about GBI in the narrative which follows, these various organization units are discussed and applied. You begin to see the match between the organization structure within SAP and the use of those units in a particular business, which is GBI

SAP ECC

Organization Structure



GBI Corporate Overview

Task Develop an organizational chart for GBI’s enterprise structure. Time 15 min

Short Description Read the below narrative to gather all relevant information for sketching GBI’s current company structure.

Due to several tax and export issues, GBI’s headquarters is located in Dallas and GBI is registered as a US company, following US GAAP accounting standards. GBI operates a subsidiary company, GBI Europe, which is based in Heidelberg and is subject to IFRS accounting standards and German tax regulations.

Material planning, finance, administration, HR and IT functions are consolidated at the Dallas headquarters. The Dallas facility manufactures products for the US and export markets and its warehouse manages product distribution for the central US and internet retailers. GBI also has warehouses for shipping and export in both San Diego and Miami. San Diego handles West Coast distribution and exports for Asia, while Miami handles East Coast distribution and Latin America exports.

GBI Europe has its headquarters in Heidelberg Germany. The majority of research and development is housed in the Heidelberg offices. Heidelberg is also the main manufacturing facility for GBI in Europe. The Heidelberg warehouse handles all shipping for southern Europe. The Hamburg warehouse handles all shipping for the UK, Ireland, Middle East and Africa. GBI sells its bikes throughout the world and employs approximately 100 people, 2/3rds of the employees are in the US and the remaining 1/3 in Europe.

Notes

Company Codes US00 DE00

Plants

DL00 MI00 (DC) SD00 (DC)

HD00 HH00 (DC)

Organization Structure

3 ‐ 1

Record your MM org. structure here and in the answer sheet

MM – Materials Management



GBI Product Strategy

Task Get familiar with GBI’s product strategy. Time 15 min

Short Description Read the below narrative about GBI’s product strategy.

GBI is a world class bicycle company serving the professional and “prosumer” cyclists for touring and off-road racing. GBI’s riders demand the highest level of quality, toughness and performance from their bikes and accessories.

Product development is the most critical element of GBI’s past and future growth. GBI has invested heavily in this area, focusing on innovation, quality, safety and speed to market. GBI has an extensive innovation network to source ideas from riders, dealers and professionals to continuously improve the performance, reliability and quality of its bicycles.

In the touring bike category, GBI’s handcrafted bicycles have won numerous design awards and are sold in over 10 countries. GBI’s signature composite frames are world-renowned for their strength, low weight and easy maintenance. GBI bikes are consistently ridden in the Tour de France and other major international road races. GBI produces two models of their signature road bikes, a deluxe and professional model. The key difference between the two models is the type of wheels used, aluminum for the basic model and carbon composite for the professional model.

GBI’s off-road are also recognized as incredibly tough and easy to maintain. GBI trail bikes are the preferred choice of world champion off-road racers and have become synonymous with performance and strength in one of the most grueling sports in the world. GBI produces two types of off-road bike, a men’s and women’s model. The basic difference between the two models is the smaller size and ergonomic shaping of the women’s frame.

Notes

Figure 3

GBI Finished Products



GBI also sells an accessory product line comprised of helmets, t-shirts and other riding accessories. GBI partners with only the highest quality suppliers of accessories which will help enhance riders’ performance and comfort while riding GBI bikes.

Figure 4

GBI Trading Goods



GBI Manufacturing Strategy

Task Get familiar with GBI’s manufacturing strategy. Time 10 min

Short Description Read the below narrative about GBI’s manufacturing strategy.

GBI operates two production facilities, Dallas and Heidelberg. Each facility has three assembly lines and can produce around 1000 bikes per year. Total production capacity is roughly 6000 bikes per year, but can be increased by 15%-20% by using overtime hours and part-time workers.

GBI has outsourced the production of both off-road and touring frames and the carbon composite wheels to trusted partners who have specialty facilities to fabricate the complex materials used. GBI maintains very collaborative research and design relationships with these specialty partners to ensure that innovations in both material and structural capabilities are incorporated into the frames. GBI primarily assembles semi-finished goods into finished goods at its production facilities. Finished goods are either stored in the local warehouse or shipped to other regional distribution centers (DC) to fulfill customer orders. Whether it is a local warehouse or a regional distribution center, these are both considered to be Plants in the SAP EEC system. This is because of the manner in which the accounting is handled.

Notes

Plants DL00 HD00

Plants (DC) MI00 SD00 HH00

Figure 5

GBI Raw Materials GBI Semi-Finished Goods



GBI Distribution Network

Task Get familiar with GBI’s distribution network. Time 10 min

Short Description Read the below narrative about GBI’s distribution network.

Given the highly specialized nature of GBI’s bicycles and the personalized needs of riders, GBI sells its bikes exclusively through well-known and respected Independent Bicycle Dealers (IBDs). These dealers employ staff members who are experts in off-road and tour racing to help consumers select the right GBI bike and accessories for their individual needs.

Notes

Figure 6

GBI Customers in

US and Germany

Sales Org.

DN00DS00UE00UW00

Due to the highly technical nature of its products, GBI has embraced the Internet (IN) primarily as an information channel, maximizing its potential for educating consumers and partners and marketing its products to a large audience.

Since GBI’s main sales channel is through specialty resellers (WH), and there are complex tax issues associated with selling in multiple states and countries, they have a limited amount of internet sales.

Dist. Channel IN

WH

The SD organization structure needs to include the Sales Org., the Dist. Channel, and the Division. Where the Division is either BI for bicycles or AS for accessories. These three structure elements comprise the Sales Area. That is, a Sales Area is described by its Sales Org., Dist. Channel, and Division. There is no separate unit identifier for the Sales Area

.

Division BI AS



SD Org. Structure

3 ‐ 2

Record your SD org. structure here and in the answer sheet

GBI Partner Network SD

–Sales & Distribution

GBI

Corporate



Task Get familiar with GBI’s partner network. Time 10 min

Short Description Read the below narrative about GBI’s partner network.

GBI has established an extensive partner operation to ensure process continuity between GBI and its partners to deliver best-in-class products for its customers. Special attention has been paid to nurturing strong relationships with suppliers and GBI is generally the largest customer of its main suppliers.

Notes

Figure 7

GBI Vendors in US and Germany



GBI IT Strategy

Task Get familiar with GBI’s IT strategy. Time 5 min

Short Description Read the below narrative about GBI’s information technology stratey.

During 2009, GBI integrated a shared services model for all IT functions, located in the Dallas office. Along with this move to centralized IT, GBI also implemented SAP ERP (version 6.0). Prior to this, divisions were running multiple, independent application environments. All ERP functions are centralized with the primary objectives to reduce costs and deliver best-in-class technology to all divisions globally. This centralized approach offers GBI an advanced business platform under a highly controlled environment, which enables consistency of operations and process integrity across the globe.

Notes

The Coca Cola Company (CCC) uses a similar shared services model. Its corporate office is in Atlanta. CCC operates a subsidiary company, CCC Chine, which is based in Shanghai. In addition to beverage syrup stales in Chine, CCC operates it largest bottling plant in Shanghai. CCC Chine is limited to the southeast one-third of China by government laws and regulations. The rest of the botting in China is done through local China or government owned and operated joint ventures. Recent sales of CCC products in China have reached 1.3 billion bottles per year with a steady growth rate.

On the one hand, this arrangement makes all the data for CCC US and CCC Chine available for reporting and analysis, which is desireable. That is, this makes it easy to do CCC global reporting. On the other hand, this means the SAP ECC system must be operable 24 hours a day. The time difference is 12 hours. So, if the SAP system needs to be maintained at midnight US Eastern time, then this is mid-day for Shanghai. The SAP system is down during prime work time in China. The shared service model needs to be carefully aligned with overall global processing requirements of a company. (Source, personal conversation with IT CCC China, 2011). The SAP ECC system does have features that can be used in this kind of business environment. Those features are beyond the level of the SAP ECC system knowledge explored in this course.

Coca Cola

Example



Task Become familiar with organization structure use within the SAP ECC System.

Short Description Examine the selection of organization units within Materials Management and Sales and Distribution.

Time 15 min

After completing these exercises you will be able to

Select organization structure units using Select View(s)

Apply Search Help to determine current organization structure units

Learning objectives

1. Materials Management – MM

Primary organizational units within materials management are plants and storage locations. These are the units from the MM – Materials Management organization structure chart.

To display organization structure units: 1. Use the SAP Easy Access Menu path:

Logistics ► Materials Management ► Material Master ► Material ► Display ► Display Current (TCode = MM03)

The Display Material (Initial Screen) appears.

Material Master transaction

2. Type your Material (number) for the Red Deluxe Touring Bike, which is

DXTR3###. Click the Select View(s) button in the Application toolbar to open the Select View(s) dialog box.

Select material view

Displaying Organization Structure Exercise



3. Click General Plant Data/Storage 1 to select that view. Then click the

Continue (Enter) button, the Organization level dialog box displays (See Figure 3.1). Notice the organizational levels are only Plant and Stor. Location (that is Storage Location). Why does the Company Code not appear? After all, the Company Code was included in the organization structure diagram of this design. This is because each Plant is uniquely assigned to the Company Code in the SAP ECC System. So, when you select a Plant, at the same time you are selecting the Company Code to which that Plant belongs. Learning this relationship of Company Codes and Plant is part of your learning about the SAP ECC System.

Figure 3.1 Organization Levels dialog box

Organizational Levels

4. Click the Stor. Location textbox to give it the focus, then click its Search

Help button . The Possibile Entries Storage Locations dialog box opens (See Figure 3.2). Notice this dialog box displays both the Plant and SLoc (Storage Location) values. This arrangement allows you to select both of these organizatons levels at the same time. Of course, you could select the Plant first and then select the SLoc. Regardless, the same Search Help entries display for the SLoc. This is just how SAP has implemented this. It is an example of how this is done in the design of SAP ECC. You have no control over it. All you can do is learn this is the way of SAP.



Figure 3.2 Possible Entries: Storage Locations

Do a screen capture of your Possible Entries: Storage locations dialog box screen with the both the Plant and SLoc displayed. Make sure you include the Status Bar in your screen capture and that it displays your SAP logon name.

5. Select Plant DL00 (Dallas), then click the Choose button .

Now click the Continue (Enter) button for the organization levels. The Display Material DXTR#### (Finished Product) screen appears. (See Figure 3.3) The top portion of the tab area, known as the header area of the tab, displays your selected Material, Plant, and Stor. Loc.. So, where is the assignment of a Plant to a Company Code? The Company Code does not appear in Figure 3.3. This is done in the set up of the SAP ECC System. This set up or initialization preparation of the SAP ECC System is known as configuration. Configuration is done using the Implementation Guide (IMG). The “Assignment Plant – Company Code” dialog box displays this assignment (See Figure 3.4). Configuration is a topic which is beyond this introduction to SAP ECC using Global Bike (GBI). The purpose of Figure 3.4 is just to show you this has been done in creating the organization structure for GBI. Configuration is an activity frequently performed by SAP consultants who specialize in doing initial preparation of the SAP ECC System together with similar changes doing the ongoing maintenance of the system. Consultants require extensive knowledge about the various SAP transactions and how they are initialized to meet the needs of a particular business, such as GBI.



Figure 3.3 Display Material DXTR3### (Finished Product)

Figure 3.4 Assignment of Plant to Company Code dialog box

Plant only assigned to a single

Company Code

Header area



You Try It 1: 6. Answer the following questions about the Material Management organization

structure. What is the Storage Location of material TRWA1### (Touring Aluminum Wheel Assembly)? Storage Location value: _______________ Storage Location name: __________________________ What is the Storage Location of material PEDL1### ( Storage Location value: _______________ Storage Location name: __________________________ How many different Storage Locations occur at DL00 (Dallas) which is a manufacturing plant? ________________________ How many different Storage Locations occur at a Distribution Center (DC) only plant? Use MI00 as the plant for determining this. _________________________

Organization levels

3 ‐ 4

You are now ready to return to the SAP Easy Access Menu screen.

7. Click the Exit button on the Standard toolbar to return to the SAP Easy Access menu.

2. Sales and Distribution – SD

Like materials managaement, sales and distribution has primary organizational unit levels that are sales organization, distribution channel, and division. In SD, a unique combination of sales organization, distrubtion channel and division is known as a sales area. That is, sales area do not hsve a separate SAP ECC values, rather they are is delineated by the combination of the other three SD organization levels. These are the unit levels from the SD – Sales and Distribution organization structure chart.



To display organization structure units: 1. Use the SAP Easy Access Menu path:

Logistics ► Sales and Distribution ► Material Data ► Business Partner ► Customer ► Display Complete (TCode = XD03)

The Customer Display: Initial Screen appears.

Customer Master transaction

2. Click the Customer textbox to give it the focus, if necessary. Type 1### in the Customer textbox. You will be exploring the organization structure for this customer. Now click the Company Code textbox to give it the focus,

then click the Search Help list button to display the Customer Display: Initital Screen and its dialog box. Type *1### in the Customer textbox, then

click the Start Search Help button . The Restricted Value Range dialog box displays with all the Customer numbers ending in 1### shown. This was done to limit the number of entries returned by the search while still showing you the available Company Codes (CoCd) for the matching Customer numbers. (See Figure 3-5). Double-click your 1### Customer number to select the US00 CoCd.

Figure 3.5 CoCd displays in Restricted Value Range dialog box

Select Company Code value



3. In the Sales area section of the Customer Display: Initial Screen, click the

Sales Organization Search Help list button to display the Sales Organization dialog box. (See Figure 3-6). Double-click US West to select it and return to the Customer Display: Initial Screen.

Figure 3.6 Sales Organization dialog box

Select Sales Organization value

4. Click the Distribution Channel Search Help list button to display the Distribution Channels dialog box. (See Figure 3-7). Double-click Wholesale to select it and resturn to the Customer Display: Initial Screen.

Figure 3.7 Distribution Channel dialog box

Select Distribution Channel value



5. Click the Division Search Help list button to display the Division dialog box. (See Figure 3-8). Double-click Bicycles to select it and resturn to the Customer Display: Initial Screen.

Figure 3.8 Division dialog box

Select Division value

6. Now, click the All sales areas… button . This displays the Sales Areas dialogbox where you can select the Sales org., Dist. Chl, and Division all at one time. (See Figure 3-9.) This also reinforces how a Sales Area is defined by the combination of the Sales Org., Dist. Chl, and

Division. You may click the Cancel button return to the Customer Display: Initial Screen dialog box.

Figure 3.9 Sales Areas dialog box

Examine Sales Areas



Do a screen capture of this Sales Area dialog box.. Make sure you include the Status Bar in your screen capture and that it displays your SAP logon name. Does it display all the Sales Areas for GBI? _______________ Are these all of the sales areas available in the GBI client? __________

7. Now, click the Continue (Enter) button to see the Display Customer: General Data screen. (See Figure 3-10.) Notice how the Application toolbar contains buttons for Company Code Data and for Sales Area Data. Each of these appears in the header area of separate screens, which contains the values for the selected Sales Area.

Figure 3.10 Display Customer: General Data screen

Customer General Data screen



8. Click the Company Code Data button in the Application toolbar. The Display Customer: Company Code Data screen appears and shows the Customer Code for this customer. (See Figure 3-11.)

Figure 3.11 Display Customer: Company Code Data screen Do a screen capture of this Display Customer: Company Code Data screen. This should verify your customer’s Company Code. Make sure you include the Status Bar in your screen capture and that it displays your SAP logon name.

Customer Company Code Data screen



9. Click the Sales Area Data button in the Application toolbar. The Display Customer Sales: Area Data screen appears and shows the Sales Area data for this customer. (See Figure 3-12.)

Figure 3.12 Display Customer: Sales Area Data screen You have confirmed the organization structure in the SD – Sales and Distribution structure chart diagram. The various organization units have been set up in the SAP ECC System to support that design. As you can see, the organization structure is most important with transactions because they relate to an organization unit and the values for the levels in the organization structure must be entered as the first part of execution the various SAP ECC System transactions.

Do a screen capture of this Sales Area dialog box.. Make sure you include the Status Bar in your screen capture and that it displays your SAP logon name. Does it display the selected Sales Areas for your GBI customer? _______________

Company Sales Area Data



You Try It 2: 10. Answer the following questions about the Sales and Distribution

organization structure for Customer number 17###. What is the Company Code for Customer 17###? Company Code value: _______________ In which country does this company sell GBI’s products? _____________ Display the Customer’s sales areas using that button from the Customer Display: Inititial dialog box. Then, do a screen capture of your Sales Areas by Customer dialog box. Make sure you include the Status Bar in your screen capture and that it displays your SAP logon name. In the Sales Areas by Customer dialog box, select the last or bottom row of the available Sales areas and display its data in the Display Customer: Company Code Area Data screen. Then, do a screen capture of this screen. Make sure you include the Status Bar in your screen capture and that it displays your SAP logon name. What is the Recon. Account (that is Reconcilliation Account) number for this customer? __________________________ How many different Sales Areas are there for Customer 17###? ________________________

Organization levels

You are now ready to return to the SAP Easy Access Menu screen.

11. Click the Exit button on the Standard toolbar to return to the SAP Easy Access menu.

Documents

Chapter 3 Organization Structure Global Bike Inc. · GBI must fit its organization structure into this fixed design of the SAP ECC system. Observe the MM units of Plant, Storage Location,