Infosys’ blog on industry solutions, trends, business process transformation and global implementation in Oracle.

« Codeless Programming for Design Thinkers | Main | Inventory Accuracy - Control Negative Inventory »

Multi-org Structure - A Balancing Act between Operational Efficiency and Financial Segregation

For most of the multi-nationals a supply chain transformation to become a global organization is a critical journey. Achieving operational efficiencies through re-organizing the supply chain is often the target however it presents a unique challenge of not losing critical financial segregation/legal statutory requirements especially in local markets. An optimal setup of Multi-orgs in Oracle to support Company's vision of achieving key business objectives for operational efficiency and financial segregation is the need of the hour.
As always there are curious case of conflicting requirements where Consolidation is required for Supply Chain efficiency, Global Planning E2E Supply Chain solution and Shared Services approach (PO/OM/Regional WH) vs. Segregation of segment reporting to generate plant/business specific P&L B/S and Ownership of Assets and Liabilities, i.e. Raw Inventory, GRNI
So, the solution revolves around how best we can define our org structure to allow us
1)    Supply Chain flexibility
a)    Ease of change to configurations, ability to quickly adapt to strategic direction.  Data conversion is more timely and less complicated.
b)    Aligns to operational/strategic alignment for items such as Centralized WH operations, Regional OM, Purchasing Org by BU.
2)    Faster implementation/Common Approach
a)    ERP roll out simplicity, speed, & cost.
b)    Ease of integration new plants/new warehouses
c)    Ease of rolling out new modules, functionality, upgrades/patches
d)    Simplifies support by reducing duplication/data/setups - Help Desk/Training
e)    More efficient structure to support accounting process changes (BC structure, I/C), legal entity changes, and/or tax strategies.
3)    Efficiency
a)    Simplify and speed up monthly closing

The answer to all of the above lies in a distinct change of functionality which Oracle has introduced in R12.
Legal Entity (LE) & Operating Unit (OU) have been separated.
a)    11i
-    LE and OU are quite identical.  No specific functionality at LE level.
b)    R12:
-    LE organizes financial compliance
-    OU organizes operational structure and processes.
-    New Modules are organized around LE, not OU functions (Banking, EB-Tax, AGIS)
-    Sub-ledger Accounting (SLA) allows dynamic configuration quite independent from Op. Unit

Using the above functionality one can create an OU structure where multiple Legal entity are associated with a single Operating unit helping us achieve the ultimate operational flexibility without compromising any segregation required for financial reporting.


In case you have additional questions or need more detailed discussions, please drop me a note @

Connect with Infosys
Infosys is a gold sponsor this year at Modern Supply Chain Event. You can listen to Infosys clients discuss industry leading best practices in the manufacturing track panel discussions. Discuss with our thought leaders on how Infosys can help you realize measurable business value from your supply chain management investments.
Join us at booth #410 to learn about our cutting-edge offerings and supply chain management solutions.

Post a comment

(If you haven't left a comment here before, you may need to be approved by the site owner before your comment will appear. Until then, it won't appear on the entry. Thanks for waiting.)

Please key in the two words you see in the box to validate your identity as an authentic user and reduce spam.

Subscribe to this blog's feed

Follow us on

Blogger Profiles