Module Objectives

Training Objectives:
• Understand the Quota Arrangement Process
• Create / Change / Display Quota Master for Source and
Material
• Describe how the source determination process can be
controlled with the aid of the quota arrangement

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Agenda

• Overview & Concept of Quota Master

• Introduction to automatic source determination process.
• Use of Quota Arrangement in automatic source
determination process
• Pre-Requisite of Quota Master
• Creation & Maintenance of Quota Master
• Configuration & Master Data Control

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Overview of Quota Arrangement

What is Quota Arrangement?

• Quota Arrangement is a mechanism to determine which source is to be assigned
to a material requirement.
• The assignment of requirements to different vendors and plants is based on quota
arrangements.
• Certain Percentage of a material requirement can be automatically assigned to
one vendor and the remaining Percentage to another.

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Overview of Quota Arrangement
• Quota Arrangement is a tool which is used in Sourcing Administration.
• We know source list is used for a source for a material. In purchase requisition
there is a tab Assign Source of Supply.
• We can assign a number of vendors in source list so that when we press Assign
Source of Supply, system will automatic pick the vendor for the material.
• We can assign many vendors to source list, at that time system will propose all
vendor in source of supply field and we have to choose one from the list.
• But via quota arrangement, we can give the quantity and percentage for a vendor,
so if we maintain many vendors in source list, system will take the correct vendor
with comparison of quantity of document and quota arrangement.
• That is the main facility of quota arrangement.

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Overview of Quota Arrangement
• In Brief Sourcing administration is a process used to Manage entire procurement
process which majorly deals with selection of Source (internal / External) in
different criteria according to the business requirement.
• The source administration is carried out using different tools, one of them is called
Quota Arrangement.
• Some of the important key terms are below which plays major role in source
administration:
• Procurement Type : Such as in-house Production, Stock Transfer from another
Plant or Procurement from external Vendor.
• Vendor Performance: Vendor Performance measured in terms of Pricing,
Accuracy of Delivery, Quality of goods etc.
• Long Term Agreement: Such as reliable source entitled to deliver goods over a
certain period with negotiated conditions:

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Overview of Quota Arrangement

Business Scenario:
•There is a daily requirement of a Raw Material, but that raw Material is available
with multiple source with difference in Price and delivery time.
•In order to meet the business demand on time and achieve balanced Material
Costing. This procurement can be planned in following way:

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Agenda

• Overview & Concept of Quota Master

• Introduction to automatic source determination
process
• Use of Quota Arrangement in automatic source
determination process.
• Pre-Requisite of Quota Master
• Creation & Maintenance of Quota Master
• Configuration & Master Data Control

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Introduction to automatic source
determination process

• The Various Source Can be adopted automatically during Following Business

Process using Quota Arrangement:
• MRP Run
• Purchase Requisition (Except Manual)
• Planned Order.
• Production Order

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Agenda

• Overview & Concept of Quota Master

• Introduction to automatic source determination process.
• Use of Quota Arrangement in automatic source
determination process
• Pre-Requisite of Quota Master
• Creation & Maintenance of Quota Master
• Configuration & Master Data Control

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Use of Quota Arrangement in automatic
source determination process

• The quota indicates which share of the requirements arising for the material over
a certain period is to be procured from which source.
• Quota Arrangement is a tool which is used in Sourcing Administration
• A Quota Arrangement divides the total requirement of a Material among the
certain Sources of Supply (Vendors) and then assigns the Quota to each Source.
• This particular Quota specifies the portion that is to be procured from that
assigned Source.

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Use of Quota Arrangement in automatic
source determination process
• Quota Arrangement Process is carried out using the below formula which
determines the Quota Rating:
Quota Rating = Quota-allocated Quantity + Quota Base Quantity
Quota
• Quota-allocated quantity: Total quantity from all purchase requisitions, purchase
orders, release orders, and scheduling agreement schedules allocated to a given
source of supply. (The quantities of quota-allocated planned orders are also
taken into account)
• Quota base quantity: This is the Quantity used to control the quota arrangement
when new sources of supply are identified /included.
• Quota: This is the number indicating the portion of total requirement of the
Material that is to be given or assigned to a particular source/vendor.

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Calculating the Quota Rating: Example

Scenario:
• You wish to include the new vendor C in an existing quota arrangement that has
been in effect for a year and previously only included vendors A and B.
• Each vendor has the quota set out in the following table:

• Quota arrangement for vendors A, B, and C

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Calculating the Quota Rating: Example

• According to the previously-discussed formula, the quota ratings for vendors A,

B, and C are as follows:
A = (780+0)/3 = 260
B= (380+0)/2 = 190
C= (0+260)/1 = 260

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Use of Quota Arrangement in automatic
source determination process

Source Determination based on Quota Rating :

•The Source with the Lowest Quota Rating represents the Valid Source.
•If more than 1 source has the quota rating as 0, then the source with the highest
quota is selected.
•The Concept States that higher the quota, lower the quota rating and higher the
probability that the relevant source will be determined as the valid source of supply.

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Agenda

• Overview & Concept of Quota Master

• Introduction to automatic source determination process.
• Use of Quota Arrangement in automatic source
determination process
• Pre-Requisite of Quota Master
• Creation & Maintenance of Quota Master
• Configuration & Master Data Control

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Pre-Requisite of Quota Master

Following are the Important Configuration and Master Data to be maintained

before Creating a Quota Master:
•Customization Settings For Quota Arrangement: Need to define keys for Quota
Arrangement uses based on different Scenario. These Keys are assigned in the
Material Master Purchasing View.
•Material No/Plant No to which the Quota Arrangement applied.
•Vendor Master.
•PIR.
•Source List.

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Agenda

• Overview & Concept of Quota Master

• Introduction to automatic source determination process.
• Use of Quota Arrangement in automatic source
determination process
• Pre-Requisite of Quota Master
• Creation & Maintenance of Quota Master
• Configuration & Master Data Control

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Maintenance of Quota Arrangement

• Menu Path : SAP Easy Access  Logistic  Material Management  Purchasing

 Master Data  Quota Arrangement  Display.
• T-code: MEQ1
• Enter the Material and Plant:

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Maintenance of Quota Arrangement

• Go to Item details and enter the required data such as: Procurement type, vendor,
Quota, Maximum Qty etc.

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Agenda

• Overview & Concept of Quota Master

• Introduction to automatic source determination process.
• Use of Quota Arrangement in automatic source
determination process
• Pre-Requisite of Quota Master
• Creation & Maintenance of Quota Master
• Configuration & Master Data Control

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Configuration of Quota Arrangement

• Menu Path: SAP IMG  Material Management  Purchasing  Quota

Arrangement  Define Number Range:

• In this Step you specify the system how, the Quota Master Number will be
saved during creation of Quota Master.

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Configuration of Quota Arrangement

• Menu Path: SAP IMG  Material

Management  Purchasing 
Quota Arrangement  Quota
Arrangement usage
• In this Step you specify the system
how, the Quota Arrangement will be
applicable in Various Business
Process.

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Configuration & Master Data Control

• Material Master Setting for Quota Arrangement Usage:

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Check point

Questions/Discussions :
• Quota Usage Keys are Used in which Master
Data ?
• What is the Formula to derive Quota Rating?
• In which business function / cases Quota
Arrangement is useful?

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Module Summary

You should now be able to:

•Explain the significance of Quota Arrangements.
•Create and maintain Arrangement.
•Describe how the source determination process can be controlled with the aid of
the quota arrangement

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Questions and Comments

• What questions or comments

do you have?

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 Exercise

Exercise 6 : Automation of source determination process using

Quota arrangement (25 min.)

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