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Division is sales organization specific.
Division in sales area - states that the customer belongs to this division
Division in MMR - its not mandatory field to enter the data but its optional - here also it states that the material belongs to this division.
As the name specify, it can be specific to sales organization or product group in simple terms. For statistical purpose or for the clear demarcation of products and there sales areas division is word we use.
For example:
Take one electrical company which manufactures T.V and Telephones. In such scenario how should we know which product is selling more. Is the demand for T.V gone up or for the Telephone.
What is the total sales coming from T.V and what is the total sales for the Telephone in some particular year, and as a whole what is the sales of whole company can be calculated. Not only that depending upon the situation we also can increase or decrease the marketing spending, production etc... which is completely from the view of business scenario.
Now Division in Sales Area is the combination of "Sales Organization + Distribution channel + Division."
Here the division is the same which we have defined in enterprise structure for the statistical purpose and clear demarcation of products. When the products are divided into two divisions, most of the time the customer could vary, or may remain same. There fore we also maintain Common distribution channel and common divisions.
So without getting confused just think division is for the statistics purpose only.
Division that you see in SAP is actually the material division. When you create materials, it can belong to one division of your company. Say for example if you take Uniliver, there are may divisions there. Say they have food and beverages, they have health products, they have products for women, they have product for babies. Now, these are broad classifications. Now, if you have material tea (like Bruckbond), it can fall in food and beverages division.
Use of division. It can help you in creating different pricing, it can help you in reporting and analysis. Also, it can help you in customizing some of the operations within SAP.
Then, why does sales area have division in it. The reason I think is simple. Division in sales area can give you flexibility. In the above example, we know that there are a lot of divisions. But, you want to have one common division to sell all your products to customers. Then you can have only one division as common division and use rest of the divisions to price and item or do an analysis.
Now suppose you are an organization which supplies materials to military and also to commercial market. Then, you want to restrict all the customers from the commercial market to buy materials which are in military division. Then, you can create two separate sales areas and work around it. (Even distribution channels can be used in this case thought). In my experience these are the things that I have seen and also, what I understand is division of material is for pricing and subsequent report basis.
If you want to break down the sales based on the division, (for each sales org and distribution channel) then, you should have the division in the sales orders. If divisions should come in sales orders, then, it should be there in the sales area.
