Multi-Organization Structure in Oracle Apps

What is Multi-Org?

Multi-Org is a server-side (applications and database) enhancement that enables multiple business units in an enterprise to use a single installation of Oracle Applications products while keeping transaction data separate and secure. 
The Multi-Org enhancement uses native database views to build a security layer on top of a single installation of Oracle Applications. In Oracle Applications the following products support Multi-Org capabilities: 

• Cash Management
• Order Management, Shipping Execution and Release Management
• Payables
• Property Manager
• Projects
• Purchasing
• Receivables
• Sales Compensation
• Sales and Marketing
• Service

Basic Business Needs:

The Multi-Org enhancement to Oracle Applications provides features necessary to satisfy the following basic business needs. You should be able to:

• Use a single installation of any Oracle Applications product to support any number of business units, even if those business units use different sets of books.
• Support any number of business units within a single installation of Oracle Applications.
• Secure access to data so that users can access only information that is relevant to them.
• Procure products from an operating unit that uses one set of book, but receive them from another operating unit using a different Ledgers.
• Sell products from an operating unit that uses one Ledgers, but ship them from another operating unit using a different Ledgers, automatically recording the appropriate inter-company sales by posting inter-company accounts payable and accounts receivable invoices.
• Report at any level of the organizational structure.

Organization Model:

The Multi-Org model provides a hierarchy that dictates how transactions flow through different business units and how those business units interact. You define the organizations and the relationships between them. 

Business Group

This is an Organization that represents the consolidated enterprise, a major division, or an operation company and has no accounting impact. The Business Group partitions Human Resources information and the Purchasing Approval Hierarchy. If you request a list of employees (in any module) you will see only those employees in the Business Group of which your Operating Unit is a part. Multiple Legal Entities can relate to a single Business Group. You must have at least one Business Group. 

Ledgers

A Ledger is a financial reporting entity that shares the  four Cs: a particular chart of accounts (accounting flexfield structure), functional currency, accounting convention and financial accounting calendar. The Ledger concept is similar in a Multi-Org environment. General Ledger secures transaction information (journal entries, balances) by Ledgers. When you use General Ledger, you choose a responsibility that specifies a Ledgers. You then see information only for that Ledgers.

Legal Entity

A legal entity represents a legal company for which you prepare fiscal or tax reports. You assign tax identifiers and other legal entity information to these types of organizations. Future enhancements will include greater functionality at this organization level.

Operating Unit

An operating unit represents an organization that uses any Oracle subledger application, for example, Order Management, Payables. 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. Responsibilities are linked to a specific operating unit by the MO: Operating Unit profile option.

Balancing Entity

This is an entity for which you prepare a balance sheet, represented as a balancing segment value in the Accounting Flexfield structure. There can be multiple balancing entities within the same operating unit structure and each of these must balance within itself. All required inter-company entries will be automatically created within the Ledgers to ensure companies can never be out of balance. A balancing segment could be a company or a division, for example.

Inventory Organization 

An inventory organization represents an organization for which you track inventory transactions and balances, and manufactures or distributes products. Examples include manufacturing plants, warehouses, distribution centers, and sales offices. The following products and functions secure information by inventory organization: Inventory, Bills of Material, Engineering, Work in Process, Master Scheduling/MRP, Capacity, and purchasing receiving functions. To run any of these products or functions, you must choose an organization that is classified as an inventory organization.

Sample Organization Structure:

Convert to Multi-Org:

After defining at least one operating unit, use ADADMIN to convert to Multi-Org. This step only needs to be perform one time. After ADADMIN is run, the Seed Data Replication program copies the applicable setup data delivered with Oracle Applications for each defined operating unit. 

Run ADADMIN to Convert to Multiple Org

When you select the adadmin option, Convert to Multiple Organization architecture, the Multi-Org switch is automatically turned on; a flag called multi_org_flag, is set to Y. The seed data replication program is then executed and processes according to the value of the multi_org_flag. 

Run Seed Data Replication 

Seed data is replicated under the following circumstances:

Submit the Replicate Seed Data concurrent request using the System Administrator responsibility.

The seed data replication program works in two modes:

All organizations: This mode applies when the seed data replication program is executed without an operating unit context.

Single organization: This mode applies when the seed data replication program is executed within the context of a particular operating unit (or Org_ID).

Perform Setups Unique to Each Operating Unit

Many setups must be repeated for each operating unit. For example:

• Supplier sites
• Customer addresses
• System options (System, Financial, Purchasing, Payables, etc.)
• Payment terms
• Tax names
• Price lists, discounts and quantity price breaks

Adding to the Organization Structure:

The Multi-Org enhancement allows you to add organizations at any time.