Procure to Pay Enterprise Structure Modeling Options

Option 1: Centralized Requisitioning, Procurement, Payables, Materials Management (PC BU <> Management BU) General Recommendation: 1 Ledger and 1 FIN BU, Multiple LEs per country All Legal Entities Serviced by one Payables BU US GAAP Primary Supplier Site Assignment Procurement BU: Service BU1 Requisition BU Payables BU Service BU1 LE2 Default LE LE1 LE3 Profit Center 2 Below LE: Y Business Functions Materials Management* Profit Center 3 Below LE: Y Business Functions Materials Management* Profit Center 1 Below LE: Y Business Functions Materials Management* Service BU 1 Business Functions Requisitioning Materials Management Payables Procurement Inventory Org 1 Inventory Org 2 Inventory Org 3 Management BU *Profit Center Business units are BU that rolls up to one legal entity. Such business unit is the management owner of revenue and costs generated by the associated inventory organizations. Generally there is a manager with P&L responsibility for such profit center. There are no additional setups involved in Payables or purchasing involving the profit center BU. These are light weight tracking entities. However, these can be used to model inter or intra company supply chain flows using transfer pricing. They need ‘Materials Management’ function just to enable ‘Below LE’ flag on the definition. Enabling the flag sets it up as profit center.

Option 2: Centralized Procurement, Payables, Decentralized Requisitioning, Materials Management (PC BU = Management BU) General Recommendation: 1 Ledger and 1 FIN BU, Multiple LEs per country All Legal Entities Serviced by one Payables BU US GAAP Primary Supplier Site Assignment Procurement BU: Service BU 1 Requisition BU Payables BU Profit Center 1 Service BU1 Profit Center 2 Profit Center 3 Default LE LE1 LE2 LE3 Profit Center 2 Below LE: Y Business Functions Materials Management Requisitioning* Profit Center 3 Below LE: Y Business Functions Materials Management Requisitioning* Service BU1 Business Functions Payables Procurement Profit Center 1 Below LE: Y Business Functions Materials Management Requisitioning* Management BU Management BU Management BU Inventory Org 1 Inventory Org 2 Inventory Org 3 *Profit Center Business units are BU that rolls up to one legal entity. Such business unit is the management owner of revenue and costs generated by the associated inventory organizations. Generally there is a manager with P&L responsibility for such profit center. There are no additional setups involved in Payables or purchasing involving the profit center BU. These are light weight tracking entities. However, these can be used to model inter or intra company supply chain flows using transfer pricing. They need ‘Materials Management’ function just to enable ‘Below LE’ flag on the definition. Enabling the flag sets it up as profit center.

Option 3A: Centralized Procurement, Semi Centralized Payables, Requisitioning, Materials Management (PC BU <> Management BU) General Recommendation: 1 Ledger and 1 FIN BU, Multiple LEs per country Subset of Legal Entities serviced by different Payables BU US GAAP Primary Supplier Site Assignment Procurement BU: Service BU 1 Requisition BU Payables BU Service BU2 Service BU3 Default LE LE1 LE2 LE3 Default LE Profit Center 2 Below LE: Y Business Functions Materials Management* Service BU 2 Business Functions Payables Requisitioning Materials Management Profit Center 1 Below LE: Y Business Functions Materials Management* Profit Center 3 Below LE: Y Business Functions Materials Management * Service BU 3 Business Functions Payables Requisitioning Materials Management Inventory Org 1 Inventory Org 2 Inventory Org 3 Management BU Management BU Service Provider Relationship Provider: Service BU1 Client BU: Service BU2 Service BU 1 Business Functions Procurement Service Provider Relationship Provider: Service BU1 Client BU: Service BU3 *Profit Center Business units are BU that rolls up to one legal entity. Such business unit is the management owner of revenue and costs generated by the associated inventory organizations. Generally there is a manager with P&L responsibility for such profit center. There are no additional setups involved in Payables or purchasing involving the profit center BU. These are light weight tracking entities. However, these can be used to model inter or intra company supply chain flows using transfer pricing. They need ‘Materials Management’ function just to enable ‘Below LE’ flag on the definition. Enabling the flag sets it up as profit center.

Option 3B: Semi Centralized Procurement, Payables, Requisitioning, Materials Management (PC BU <> Management BU) General Recommendation: 1 Ledger and 1 FIN BU, Multiple LEs per country Subset of Legal Entities serviced by different Payables BU Supplier Site Assignment Procurement BU: Service BU 1 Requisition BU Payables BU Service BU2 Service BU3 US GAAP Primary LE1 LE2 LE3 Default LE Default LE Profit Center 2 Below LE: Y Business Functions Materials Management * Profit Center 3 Below LE: Y Business Functions Materials Management * Service BU 2 Business Functions Procurement Payables Requisitioning Materials Management Profit Center 1 Below LE: Y Business Functions Materials Management* Service BU 3 Business Functions Procurement Payables Requisitioning Materials Management Inventory Org 1 Inventory Org 2 Inventory Org 3 Management BU Management BU *Profit Center Business units are BU that rolls up to one legal entity. Such business unit is the management owner of revenue and costs generated by the associated inventory organizations. Generally there is a manager with P&L responsibility for such profit center. There are no additional setups involved in Payables or purchasing involving the profit center BU. These are light weight tracking entities. However, these can be used to model inter or intra company supply chain flows using transfer pricing. They need ‘Materials Management’ function just to enable ‘Below LE’ flag on the definition. Enabling the flag sets it up as profit center.

Option 3C: Semi Centralized Procurement, Payables, Requisitioning (Only Expense Destination Purchase, No Inventory Management) General Recommendation: 1 Ledger and 1 FIN BU, Multiple LEs per country Subset of Legal Entities serviced by different Payables BU Supplier Site Assignment Procurement BU: Service BU 2 Requisition BU Payables BU Service BU2 Service BU3 US GAAP Primary Default LE Default LE LE1 LE2 LE3 Profit Center 2 Below LE: Y Business Functions Materials Management Profit Center 1 Below LE: Y Business Functions Materials Management Profit Center 3 Below LE: Y Business Functions Materials Management Service BU 2 Business Functions Procurement Payables Requisitioning Materials Management Service BU 3 Business Functions Procurement Payables Requisitioning Materials Management Inventory Org 1 Inventory Org 2 Inventory Org 3 Management BU Management BU

Option 3D: Semi Centralized Payables (Non-PO, Expense only invoices) Subset of Legal Entities serviced by different Payables BU, but there is no hard grouping of LE to BU. It’s a manual process to ensure which BU processes invoices for which LE General Recommendation: 1 Ledger and 1 FIN BU, Multiple LEs per country US GAAP Primary LE1 LE2 LE3 Default LE Default LE Profit Center 2 Below LE: Y Business Functions Materials Management Profit Center 3 Below LE: Y Business Functions Materials Management Service BU 2 Business Functions Payables Profit Center 1 Below LE: Y Business Functions Materials Management Service BU 3 Business Functions Payables Inventory Org 1 Inventory Org 2 Inventory Org 3 Management BU Management BU

Payables and Payments business functions Within a Ledger Payables BU can also perform Payment function for its invoices Payables BU can let a central Payments BU to pay on-behalf of multiple legal entities. Across Ledger Centralized Payment is not supported