Different between Operating Units types

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Posted on by Ibrahim Salah Mohamed

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Microsoft Dynamics AX 2012 introduce new feature - operating unites - with different types

cost centers, business units, value streams, departments, and retail channels

what is the different between all of these types and in what is the usage from each one

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Ibrahim Salah Mohamed

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Operating unit is an organization that is used to divide the control of economic resources and operational processes in a business. People in an operating unit have a duty to maximize the use of scarce resources, improve processes, and account for their performance.
In Microsoft Dynamics AX, the types of operating units include cost centers, business units, value streams, departments, and retail channels. The following table provides more information about each type of operating unit.

Operating unit type	Description	Purpose
Cost center	An operating unit in which managers are accountable for budgeted and actual expenditures.	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.	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.	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.	Used to report on functional areas. A department may have profit and loss responsibility, and may 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.