Use of the Profit center in a multinational Pharma company
In the Pharmaceutical companies, as well as in other industries, the profit center object is used to represent the “division” in the accounting process.
All the values, analysis and targets can be measured at profit center level, This means all the financial postings need to be addressed at profit center level, and the profit center reports are the real tool to measure the performance of the Division,
All the postings coming from Finance and Controlling, as well as from Purchasing, Sales and Production, are collected by the profit centers, and there, during the month end / quarter / year end closing, all the assessments are posted without necessarily “touching” the financial accounting books.
If, as it usually happens, it is necessary to consolidate at group level the data coming from several systems, both SAP and NON SAP type, a legacy tool is used to collect, integrate and harmonize all the “numbers”. In this case the data available at profit center level are then transferred, according to a defined procedure, to the external / legacy official reporting system:
PROFIT CENTER AND PROFIT CENTER HIERARCHY
The Profit Center hierarchy is based on a top level formed by profit center hierarchy nodes representing the medical areas of activity (Pharmaceutical, Oncology, Research, Vaccines, Generics, etc.), plus one node related to the Corporate area:
A dummy profit center is also created.
The code of the profit Center node is also the “code” of the division. So division “15” is the “Vaccines” division, division “16” is the “research” division, etc.
Below the top node there is a breakdown of the areas of activity of the main medical area. For example, the “Vaccines and Diagnostic division” manages two areas, “Vaccines” and “Diagnostic”.
The Vaccines subdivision manages two areas: the single product areas (Brands), and the services connected to them (for example “Marketing”):
The lower level of the hierarchy, meaning the leaves, is formed by the real profit centers and is used to represent the single activity (a service, for example) or a single kind of product (for example the “pain killers”). The profit center is not the product itself. Indeed the product is represented by the material master, to which the profit center is connected.
PROFIT CENTER AND MATERIAL MASTER
As mentioned before, the material master record (transaction MM03) represents the single product.
Under the tab. “Plan data / stor. 2” it’s possible to find the profit center:
In the table MARC it’s available the link between Material and Profit Center;