Guidelines for organization modeling

When preparing to set up your organization hierarchical model for Sterling Selling and Fulfillment Foundation, you need to identify which roles and responsibilities you want to define for each organization.

To determine which organizations should have which roles and responsibilities assigned to them:

  1. Identify each of the Organizations for your organization hierarchy. That is, business group, companies, legal entities, sales organizations and purchasing organizations.

    There can be several reasons for a business group to have multiple companies. One example is the acquisition of a company. Another example could be when the business group has two unrelated businesses.

    A company may need to have multiple legal entities if it operates in geographical areas that are different from each other in regards to legal issues such as currency, taxation structure, or other legal requirements.

    Decide the basis for defining sales organizations (for example, sales channel, product group, geography or customer). Sales organizations have sourcing rules and pricing rules. This may help you determine sales organizations. For example, if you have different pricing rules or sourcing rules for different sales channels or geographies, then your sales organizations can be based on sales channel and geography.

  2. Identify Enterprises for the organizations in your organization hierarchy. Considerations for identifying Enterprises are explained through the examples in Model example 1: electronics company and Model example 2: third-party logistics company.
  3. Identify Catalog organization(s). Any organization in the organization hierarchy can be the catalog organization. Typically, the main company is the catalog organization. The Catalog organization needs to be defined at a lower level in the organization hierarchy if two organizations of the company have same item identifier for two different physical items and the company does not have a common Item ID for the two items. The Catalog organization can be defined at a lower level if two legal entities do not cross sell each other's items. But, the Catalog organization cannot be below the Inventory organization in the hierarchical structure.
  4. Identify Inventory organization(s). Any organization in the organization hierarchy can be an inventory organization. Typically, an inventory organization is kept at the legal entity level. There are both advantages and disadvantages in keeping the Inventory organization at this level in the hierarchy. For example, if the Inventory organization is at the legal entity level then all sales organizations of the legal entity have equal access to the inventory in the locations of the legal entity (with the capabilities to restrict access of a sales organization to only designated physical locations within the inventory organization). This can be an advantage in one business and can be disadvantage in other business.
  5. Identify physical location owners (nodes). This definition in most cases should map the real ownership of physical locations. Typically legal entities are owners of the physical asset and are modeled as owner organizations of nodes.