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Accounting / Distribution / Materials Management Organization Model

Using the accounting, distribution, and materials management functions in Oracle Applications, you define the relationships among inventory organizations, operating units, legal entities, and sets of books to create a multilevel company structure, as shown in below Figure.

 
Legal Entities Post to a Set of Books
Each organization classified as a legal entity identifies a set of books to post accounting transactions.

Operating Units Are Part of a Legal Entity
Each organization classified as an operating unit is associated with a legal entity

Inventory Organizations are Part of an Operating Unit
Each organization classified as an inventory organization references an operating unit.
Inventory Organization Determines Items Available to Order Management
The Item Validation Organization parameter specifies which Oracle Manufacturing organization is used to validate inventory items. You must define all transactable items in this organization. Some inventory item attributes for Receivables and Order Management, including Tax Code and Sales Account, are specific to an operating unit or an accounting flexfield structure. Therefore, you should define an item validation organization for each operating unit.
Inventory Organization Determines Items Available to Purchasing
The inventory organization you specify in the financial options for each operating unit determines the items available in Purchasing. You can only choose an inventory organization that uses the same set of books as your operating unit.

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Human Resources Organization Model

With Oracle Human Resources, you can define multilevel organization hierarchies, with a business group at the top of each hierarchy. When you define new organizations, they are automatically assigned to the business group associated with your current session. Each organization is part of a business group. The business group is usually the top box on an enterprise organization chart, as shown in below figure.

 
The business group is the largest organization unit you set up in Human Resources to represent your enterprises as an employer. After defining one or more business groups for your enterprise, you set up one or more government reporting entities (GREs) within each business group. The GRE is the organization that federal, state, and local governments recognize as the employer.

Below this level, you represent the groupings in which employees work, such as branches, departments, or sections, by means of internal organizations. To enable the assignment of employees to an internal organization, you classify the internal organization as an HR organization.
You can define external organizations in the same way as internal organizations, so that you can represent organizations that are not part of your enterprise (such as training vendors or tax offices). The major difference between internal and external organizations is that you cannot assign people to an external organization.

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Types of Organizations in R12

You can define organizations and the relationships among them.
You create sets of books using the Define Set of Books window in Oracle General Ledger. You define all other types of organizations using the Define Organization window.
1. Business Group
The business group represents the highest level in the organization structure, such as the consolidated enterprise, a major division, or an operation company. The business group secures human resources information. For example, when you request a list of employees, you see all employees assigned to the business group of which your organization is a part.
Note: This is true in all applications except the HR applications, which support more granular security by a lower–level organization unit, the security profile. Multiple sets of books can share the same business group if they share the same business group attributes, including HR flexfield structures.
2. Set of Books
A financial reporting entity that uses a particular chart of accounts, functional currency, and accounting calendar. Oracle General Ledger secures transaction information (such as journal entries and balances) by set of books. When you use Oracle General Ledger, you choose a responsibility that specifies a set of books. You then see information for that set of books only.
3.1 Legal Entity
A legal company for which you prepare fiscal or tax reports. You assign tax identifiers and other legal entity information to this type of organization.
Note: There are currently only a few features provided for legal entities, such as intrastat movement reports and
intercompany invoice generation.
3.2 Balancing Entity
Represents an accounting entity for which you prepare financial statements. This is a segment in the Accounting Flexfield structure (usually the Company segment) at which all accounting entries must balance. There may be multiple companies within the same structure, and each of these must balance within itself. Each legal entity can have one or more balancing entities. You can use Flexfield Value Security rules to restrict data entry of balancing segment values by legal entity
or operating unit.
4. Operating Unit
An organization that uses Oracle Cash Management, Order Management and Shipping Execution, Oracle Payables, Oracle
Purchasing, and Oracle Receivables. It may be a sales office, a division, or a department.
An operating unit is associated with a legal entity.
Information is secured by operating unit for these applications. Each user sees information only for their operating unit. To run any of these applications, you choose a responsibility associated with an organization classified as an operating unit.
5. Inventory Organization
An organization for which you track inventory transactions and balances, and/or an organization that manufactures or distributes products. Examples include (but are not limited to) manufacturing plants, warehouses, distribution centers, and sales offices. The following applications secure information by inventory organization:
Oracle Inventory, Bills of Material, Engineering, Work in Process, Master Scheduling/MRP, Capacity, and Purchasing receiving functions.
To run any of these applications, you must choose an organization that has been classified as an inventory organization.
6. HR Organization
HR organizations represent the basic work structure of any enterprise.
They usually represent the functional management, or reporting groups that exist within a business group. In addition to these internal  organizations, you can define other organizations for tax and government reporting purposes, or for third part payments.
7. Organizations in Oracle Projects
Oracle Projects allows you to define organization hierarchies to reflect your company’s organizations structure. You can add Oracle Projects–specific organization types to the organization hierarchy (for example, projects organizations or Expenditure organizations) to help you to better manage your project control requirements. You assign project and expenditure hierarchies to operating units.
8. Asset Organizations
An asset organization is an organization that allows you to perform asset–related activities for a specific Oracle Assets corporate depreciation book. Oracle Assets uses only organizations designated as asset organizations
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Multi Org(Multiple Organizations)

The Oracle Applications organization models define organizations and the relationships among them in arbitrarily complex enterprises. This organization model serves as the cornerstone for all of the Oracle Applications products. It dictates how transactions flow through different organizations and how those organizations interact with each other.
Generally, a complex enterprise has several organization structures, such as Internal, Accounting, and Human Resources. You are able to define different structures to customize Oracle Applications according to your business needs.
Basic Business Needs
Oracle Applications provides you with the features you need to satisfy the following basic business needs:

  1. Use a single installation of any Oracle Applications product to support any number of organizations, even if those organizations use different sets of books.
  2. Define different organization models
  3. Support any number of legal entities within a single installation of Oracle Applications.
  4. Secure access to data so that users can access only the information that is relevant to them.
  5. Sell products from a legal entity that uses one set of books and ship them from another legal entity using a different set of books, and automatically record the appropriate intercompany sales by posting intercompany accounts payable and accounts receivable invoices.
  6. Purchase products through one legal entity and receive them in another legal entity.

Major Features
Multiple Organizations in a Single Installation
You can define multiple organizations and the relationships among them in a single installation of Oracle Applications. These
organizations can be business groups, sets of books, legal entities, operating units, or inventory organizations.
When you run any Oracle Applications product, you first choose an organization—either  implicitly by choosing a responsibility, or explicitly in a Choose Organization window. Each window and report then displays information for your organization only. Organizations that share the same functional currency, Accounting Flexfield structure, and calendar can post to the same set of books.
Secure Access
You can assign users to particular organizations. This ensures accurate transactions in the correct operating unit.
Sell And Ship Products From Different Legal Entities
You can sell from one legal entity and ship from another, posting to each organization’s set of books.
Receive Goods Into Any Inventory Organization
You can enter purchase orders and assign for receipt any inventory organization that uses the same set of books. Your purchase order operating unit and receiving inventory organization must share the same set of books to receive against a purchase order.
Automatic Accounting for Internal Requisitions
You can create an internal requisition (sales order) in one organization, then ship from another organization, with correct intercompany invoicing.
Multiple Organizations Reporting
You can set up your Oracle Applications implementation to allow reporting across operating units by setting up the top reporting level. You can run your reports at the set of books level, legal entity level, or operating unit level

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Multiple Organizations Access Control

Multiple Organizations Access Control is an enhancement to the Multiple
Organizations feature of Oracle Applications. Multiple Organizations Access Control
allows a user to access data from one or many Operating Units while within a given
responsibility. Data security is maintained using the Multiple Organizations Security
Profile, defined in Oracle HRMS, which specifies a list of operating units and
determines the data access privileges for a user.

In Release 12, several controls are moved from the Payables Options or Financials Options forms to a new setup form that is common for Oracle Payables across all
operating units, the Payables System Setup form. If the upgrade finds conflicts in the
settings across multiple operating units, it will choose the most frequently occurring
setting.

Oracle Applications will not automatically create security profiles during the Release 12
upgrade. If you want to use Multiple Organizations Access Control, you will first need
to define security profiles, then link them to responsibilities or users.
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