Oracle EBS: MultiOrg Concept

Since Oracle EBS or E-Business Suite is a complete automated application and caters the need of
variety of industries. It has an architecture called MultiOrg or Multiple Organization.
Whenever we talk about an organization irrespective of its multiple structure, we will find certain
common things or feature or let me call it departments. It is not necessary that every
organization has every department. But some departments and/or processes are more or less the
same.
What is an Organization? In EBS it is a vague term, infact, varied term. In Oracle EBS an
organization can be a Legal Entity, or an Inventory, or a department. Anything can be treated as
organization in Oracle. When we go through the Oracle EBS documentation we will find the
excessive use word Organization. But it not the organization we refer it to here in daily routine.
In our daily routine if we say the word organization, we will certainly be referring to some
company, for example, Inbox Business Technologies, IBM, Acer, HP, these are the example of
organization selling hardware. But in Oracle Multi Org structure they are referred to as Legal
Entities.
The Multi Org structure in Oracle consists of following organizations
1.

Business Group or HR Business Group

2.

Ledger

3.

Legal Entity or GRE

4.

Operating Unit

5.

Inventory Organization

BUSINESS GROUP (BG)

A business group is the top level in multi org structure. Oracle view human
resource as the basis for the business. A human resource is selling the products
that organization is manufacturing, a human resource is purchasing raw
materials required to make a product, a human resource is making
accounting and financials statement. In short a legal entity transacts
because of Human Resources.
In Oracle EBS, Business Group holds the employee information. If there is a Group of
Companies and they all are using a single instance of Oracle Apps then every
employee in each company will be defined at BG level. Each employee will
then be assigned a responsibility. That responsibility determines which company
that employee belongs to and what type of transaction can be carried out.
When a fresh EBS instance is installed it has a Default Business Group
namely Setup Business Group. We usually rename it as per our requirement.
A BG can have
Groups in

multiple ledger

attached to it and there can be

one

Multiple Business

instance.

Oracle

HR

resides

at

this

level

of

MultiOrg

structure.

LEDGER
Formerly called Set of Book in R11i. Ledger is an accounting book.
Take an example of a utility shop with an old man sitting with a big register.
In that register he notes everytransaction related to money or finances. Lets say
he sells some bottles of mineral water to a person. He notes the Date on the
transaction took place, the Amount involved in that transaction, Persons
name, particulars of goodssold to that person.
This is similar to what we do in a ledger. There are 4Cs concepts in Ledger.
1.
Chart of Account (Particulars of Goods)
2.
Currency (Amount)
3.
Calendar (Date)
4.
Subledger Accounting Convention (Cash / Accrual)
Oracle General Ledger resides at this level.
LEGAL ENTITY
Legal Entity definition by book is any company which is reporting to
Government, an entity which exists. In Oracle EBS a company is also referred
to as GRE Government Reporting Entity. A legal entity has a disclosure requirement
of their annual revenue. An organization which prepares its Balance
Sheet and Income Statement.
Oracle says anything can be your legal entity. Your manufacturing plant can be
your legal entity, your departmentscan be your legal entity. Your inventory can be
your legal entity. A legal entity is the one for which you want a Balance Sheet
and Income statement. How can a balance sheet be generated for a
department is another topic
OPERATING UNIT

Operating Unit (OU) comes under a ledger with a legal context. Legal Context is
referred to as the Legal entity to which it is attached. The purpose of an
operating unit is to segregate or separate subledger transactions. A legal entity
having different branches in Pakistan can treat each branch an operating
unit.
Oracle Payables, Purchasing, Receivables, Order Management resides at this
level of MultiOrg.
In general an operating unit is the one dealing with paper work. How?
Take an example of P2P (Procure to Pay) cycle. It involves Purchasing and Payables.
From Purchasing you generated an RFQ (Request for Quotation) and send it to
vendor, against the RFQ you receive a Quotation. Against that quotation you
send the PO (Purchase Order), Against that PO you receive Goods and GRN (Goods
Received Note), against that GRN you receive payables Invoice, against that invoice
you make Payment. Each of these documents are from Oracle Purchasing
and Payables.
Similarly there is a O2C (Order to Cash) cycle.
INVENTORY ORGANIZATION

Inventory Organization is last or the lowest level of MultiOrg structure. Inventory

organization refers to any kind storage of item, finished goods and raw
materials, etc. This storage can be Warehouse, Floors, Cabinets, Drawers, or
a logical store which dont exists physically.
Inventory in
general refers to storage and movement of goods from
one Inventory organization to another. Inventory has two types of
inventory: Master Item Inventory Org, Inventory Organization and Sub-Inventory Org.
Master item inventory stores the every information of item or the definition of
item. It does not store the information oflocation that item is placed or the quantity
of item available. Inventory Organization is same as the Master but it has the costing
definition, locator information, and types of item it can store. Each Inventory
organization should have at least one Sub Inventory Organization. There can
be multiple sub inventories under one Inventory Organization. Costing method
can also be defined at sub inventory level.
Oracle Inventory, Manufacturing, Warehouse Management, Enterprise Asset
Management resides at this level.