Purchasing organization structure

Question

Hi Team,
I have a question on purchasing organization management. Currently there are two scenarios:
Option 1: There is only one purchasing organization for one country and two company codes. Purchasing organization is not assigned to company code. All the plants in the countries are assigned to one Purchasing Organization. But plants are assigned to respective company code.
Option 2:  There are two purchasing organization for one country and two company codes. Each Purchasing organization is assigned to respective company code. All the plants in the countries are assigned to respective company codes and Purchasing Organization.  I mean one set of plants are assigned to one purchasing organization and company code and other set of plants are assigned to other purchasing organization and company code.
Now my question is which option is better? The purchasing team (Buyers) are located in different cities in one country but they can procure for any purchasing organization so what is the benefit of having option2.
I see advantage in option 1 as it reduces lots of master data and if needed we can control the conditions by Purchasing info record at plant level.
Please reply.
Regards,
AG

Answer 1

Hi
Porg is a
Organizational unit within Logistics, subdividing an enterprise according to the requirements of Purchasing. A purchasing organization procures materials and services, negotiates conditions of purchase with vendors, and bears responsibility for such transactions.
Based on the Enterprise, Company and plant size, location, logisitics geographics  the decision has to be taken at what level the Porganisation has to be defined and assigned.*
Purchasing organizations may be defined according to the following criteria
Different legal responsibilities
How procurement is organized within a specific enterprise, for example, several areas may be responsible for procurement, each enterprise may have its own purchasing policy
The need to break down purchasing activities according to specific criteria, for example:
According to enterprise areas
According to responsibility for different geographic areas (national or international level)
According to products procured
The need to record certain purchasing-specific information, such as prices, conditions, or vendor evaluation, in the R/3 System
You create purchasing-specific information for each purchasing organization, for example:
Vendor master data
Purchasing info records
Vendor evaluations
Porg may be defined based on the procurement methods
Company-code- or plant-specific purchasing
Central purchasing
Central contract management
The purchasing organization is then active for all company codes and is not assigned directly to one company code. In this case, you assign the purchasing organization to the company code when procurement processes are being carried out.
(Courtsey SAP)
Hope this will give an idea
Cheers
Kris
Edited by: KRISHNA AKULA on Jan 14, 2011 10:31 AM