Sales Area vs Sales Organization

When you’re talking about a company, based on which thing should we take?

Is it different company codes for different locations or is it based on the product group?

Sales Organisation is the organisational unit which responsible for the selling of the product, movement of goods to the customer, customer right of course.

Sales Area is the combination of the Sales:
Organisation + Distribution Channel + Division.

Company code of an organisation is the legal entity which has separate Balansheet and profit & loss A/C required by law for the legal purpose so whenever an organisational unit have the different Balance sheet and P/L A/c you can define a company code.

Organisational Structure broadly refers to the way a company follows a set path of systems/hierarchies. Different companies do have different structures and the differences in structures emanate basically from the strategies.

STRUCTURE FOLLOWS STRATEGY

A Company’s structure can be mapped in R/3 which would facilitate the flow of information, flow of process and also facilitates workflow in a logical way.

A Sales Organisations structure is based on the Elements of the Organisation which are as follows:

1. Company Code
2. Sales Organisation
3. Distribution Channel
4. Division
5. Plant
6. Shipping POint.

A Company Code is generally created by finance guys and it broadly represents the highest point of the structure.

The relation between Sales Org and Company code is Unique. One Sales Organisation can be assigned to one Company code. Think of one practical situation where in u can Say that Essar is One Group (Client).
Essar Infotech (Company Code), Essar Oil (Company Code).
Essar Oil may have Essar South (Sales Org) and Essar North( Sales Org). You have to remember that Essar SOuth is only assigned to Essar Oil and not Essar Infotech right….

A Combination of Sales Org, Distribution Channel and Division is called a Sales Area and a Sales Area is assigned to the company thru the Sales Org.

A plant is assigned to the company code. It is also assigned to the Sales Org and Dist Channe and this channel is called Delivering Plant.

A Shipping POint is assigned to the CLIENT.