The deciding factor is whether you mainly want to represent the object concerned in the R/3 System as a technical object, that is, as a piece of equipment or functional location:

• Equipment, Functional Location

You should represent an object as a technical object if it is repaired, not exchanged, in the event of a breakdown. In this case, you represent the object as an individual object whose maintenance or service history can be documented.

• Material, Assembly

You should not represent an object as a technical object if it is exchanged in the event of a breakdown because repairing it is not worthwhile due to its low value. In this case, you represent the object as a material or assembly. This does not enable you to document a maintenance or service history, but a material or assembly can also be a reference object for a notification or order.

• A piece of equipment can be serialized by assigning a material number and serial number to it. This makes inventory management possible for the equipment.
• You can create a piece of equipment with a material as reference and thereby copy material data. From Release 4.6, this also includes the classification of material.
• A piece of equipment can be configured (using a super bill of material/variant configuration).
• Pieces of equipment can be installed in functional locations, in other pieces of equipment, or exist as individual objects.
• From Release 4.6, a piece of equipment can be a fleet object in Fleet Management.
• A piece of equipment can be a device in the industry solution Utilities (IS-U).
• A piece of equipment that is installed in a technical object can store the history of its installation location. The system records a usage period for each installation location, enabling you to track the complete installation history.
• In addition to the standard tab pages for the equipment master record, you can call up further tab pages where necessary using the menu (sales and distribution data, production resources/tools data, configuration data), without having to make any settings in Customizing.

• When you create structures, the pieces of equipment are not ordered in the structure automatically. You have to assign the equipment for each master record manually.
• The equipment number cannot be changed once it has been created. If you have made a mistake during external number assignment, you must archive the equipment.
• If you use many pieces of equipment as individual objects or equipment hierarchies, without also using functional locations, you should classify the pieces of equipment. This enables you to search more easily.

• From Release 4.5, you can change the label for the functional location, provided that you use the alternative labeling function. Moreover, additional labels ( alternative labels) are possible for functional locations.
• Functional locations are automatically ordered in the structure when created, based on the structure indicator (according to the top-down principle). This simplifies the process of creating functional location structures.
• Since the structure of functional locations is strictly hierarchical, it is possible to summarize data (for example, costs) for individual hierarchy levels.

• You must create a structure indicator for each structure in Customizing.
• Functional locations can only be installed in functional locations or exist as individual objects.