Organizational hierarchy and operating units in D365

In Microsoft Dynamics 365 (D365), the organizational hierarchy and operating units are important concepts that help structure and manage business operations within the system. While I don't have access to specific articles, I can provide you with an overview of these concepts.

1. Organizational Hierarchy: The organizational hierarchy in D365 represents the structure of your company or organization. It defines how various business units, departments, and teams are organized and related to each other within the system. The hierarchy can be based on geographical locations, divisions, departments, or any other relevant organizational structure.
2. The organizational hierarchy is typically defined using entities called Organizational Units, which can be created and configured in D365. Each Organizational Unit can have its own settings, security roles, and business processes. The hierarchy allows for the delegation of responsibilities and provides a framework for managing data and processes across different levels of the organization.
3. Operating Units: Operating units are subsets or divisions within the organizational hierarchy that represent specific business functions or geographical areas. They are used to manage and control operations at a more granular level. Operating units can be created to reflect different departments, subsidiaries, business lines, or any other relevant divisions within your organization.
4. Operating units in D365 provide a way to compartmentalize data and processes, allowing for better control and segregation of duties. Each operating unit can have its own configuration settings, security roles, and business processes tailored to its specific needs. Users can be assigned to one or more operating units based on their roles and responsibilities.
5. By utilizing operating units, organizations can effectively manage their business operations and ensure data privacy, security, and compliance across different functional areas or geographical regions.

The operating units in finance and operations apps are:

• Cost center - An operating unit in which managers are accountable for budgeted and actual expenditures. It is used for the management and operational control of business processes that span legal entities.
• Business unit - A semi-autonomous operating unit that is created to meet strategic business objectives. It is used for financial reporting that is based on industries or product lines that the organization serves independently of legal entities.
• Value stream- An operating unit that controls one or more production flows. It is commonly used in lean manufacturing to control the activities and flows that are required to supply a product or service to consumers.
• Department - An operating unit that represents a category or functional part of an organization that performs a specific task, such as sales or accounting. It is used to report on functional areas. A department can have profit and lose responsibility and consist of a group of cost centers.
• Retail channel - An operating unit that represents a brick and mortar store, an online store, or an online marketplace. Used for the management and operational control of one or more stores within or across legal entities.
• Branch - An operating unit that represents a branch location, outside of the main location of the business. This is a part of Fleet management sample module and is not installed as part of production environment.
• Rental Location - An operating unit that represents a rental location of the business. This is a part of Fleet management sample module and is not installed as part of production environment.
• Region - An operating unit that represents a geographical area of the business. This is a part of Fleet management sample module and is not installed as part of production environment.
• Teams - A team is an organization in which the members share a common responsibility, interest, or objective. Teams cannot be used in organizational hierarchies.

Carefully consider the functionality described below as you make your decision.

How to create Organizational Hierarchy .

Organization and administration > Organizations > Internal Organizations

From New drop down we can create internal organization

By clicking new we can create multiple business unit

By clicking new we can create multiple Department's

Organization and administration > Organizations > Organization hierarchies

Click New and create one and after save click on view

From Insert drop down we will create a organization Hierarchy with different options available

An organizational hierarchy is usually depicted as a pyramid-shaped structure, with the highest level at the top and subsequent levels branching out below. Each level represents a different layer of management or responsibility within the organization. Here's a simplified example can vary from company to company

1. Chief Executive Officer (CEO)

• Chief Operating Officer (COO)
• Chief Financial Officer (CFO)
• Chief Marketing Officer (CMO)
• Chief Technology Officer (CTO)

1. Vice Presidents (VPs)

• Vice President of Sales
• Vice President of Human Resources
• Vice President of Operations

1. Directors

• Sales Director
• Marketing Director
• Finance Director
• IT Director

1. Managers

• Sales Manager
• Marketing Manager
• Finance Manager
• IT Manager
• Manufacturing Manager

1. Supervisors

• Sales Supervisor
• Marketing Supervisor
• Finance Supervisor
• IT Supervisor
• Production Supervisor

1. Employees/Staff

Thanks & Regards,

Abhishek Jindal

(Microsoft D365 F&O SCM and SCM manufacturing Functional consultant Associate)