Quota Arrangements to Control Supplier Capacity Restraints in SAP – MM
I’m throwing this out there right away… This is my first blog on SDN. I’ve wanted to do one for some time now, but didnt want to write something just for the sake of it. However, a recent business issue and relatively simple solution has prompted me to in hopes it could bring some value to someone out there.
The business issue was as followed “We have a supplier who can only produce “X” amount of material/product per week… How can we monitor this so we know when this capacity is reached, and how can we automatically order the rest from a different supplier?”
In searching for a solution (through SDN), I couldnt find anything that encompassed the full scenario. However, a few posts hinted at using a quota arrangement to regulate capacity, and after some investigation, I was able to come up with a simple solution for this issue with the use of quota arrangements and the max quantity release feature.
1) Activate Quota arrangement function in material – In order for the quota arrangement to work, it first needs to be activated for the material(s) the vendor is providing. This can be done in material master – purchasing view screen – Quota arr. Usage field (You’ll need to figure out what value to use based on your companies setup. Also note this material is setup with a simple MRP type (PD), with a lot size EX (lot for lot).
2) Setup source list – Next, setup a source list which contains both the vendor with the limited capacity, and the vendor that should take on the remaining demand. In this case, I have two scheduling agreements setup in the source list (but this could be done for standard PR/PO as well). In all of the examples below, vendor 924625 will be the vendor with the capacity restraint, and vendor 909099 will take the remaining demand.
(Note – it is assumed at this point info records have already been created for the material/vendor/plant combinations)
3) Setup Quota Arrangement – Next, create a quota arrangement for the vendor with the limited capacity (924625). The setup of the quota arrangement should be standard, but there also needs to be entries in the following fields:
a) Max Rel. Qty – Use this field to set maximum capacity limit of the vendor
b) Number of Periods – Use this field to determine the number of periods the max release quantity is valid for
c) Period to which release quantity relates to – Use this field to determine if the capacity limit is for a week, month, or against the PP planning calendar
d) Priority – In case there are more than one vendor on the quota, use priority to determine sequence
In our example – we will have a maximum capacity 1,000 qty per week (W), applying to all periods (1).
4) Adding demand – Next, I will add 3000 planned independent requirements (MD61) for the current week, and 500 qty a couple weeks later.
5) Run MRP–Next, I will run MRP to generate the requirements. The results below show that for the first week, once the max capacity was reached for vendor 924625(1000 qty, on SA # 5500033221), the remaining demand is moved to the other vendor (setup on the source list). Also note that the capacity “starts over” after a week, which is why the demand shifts back to vendor 924625.
6) If the Period to which release quantity relates to is set to Month (M) instead of Week (W) in the quota arrangement, and also the Number of Periods is changed (accordingly to one’s need), the results will show once the max capacity is reached with vendor 924625, all other demand shifts to the other vendor for a month. In this example, the maximum capacity for 924625 was reached after the first week, and all other demand for the month is shifted to the other vendor
Quota Arrangement changes:
Before MRP Run:
After MRP Run:
Notice the difference on how the capacity limit does not start over until the following month, while in our first example it started over every week.
With master data setups, vendor capacity limits can be monitored systematically through the use of quota arrangements. It may not meet all scenarios out there, but it is a viable option to purse instead of attempting to development something custom.