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Author's profile photo Ramagiri Srinivas Rao

Functionality of Quota Arrangement in Production

In addition to the Blog posted by Mr. Anupam Sharma Production version-Alternate BOM selection-Quota arrangement and Mr Rajen http://scn.sap.com/community/erp/manufacturing-pp/blog/2013/08/15/alternative-bom-selection-a-workaround like to share some more inputs on Quota Functionality in Production.


Quota Arrangement:

If a material can be obtained from various sources of supply, each individual source of supply can be allocated a quota arrangement. The quota arrangement is valid for a certain period of time and specifies exactly how the receipts are to be distributed amongst each source of supply.


We can set quota arrangement for in-house production as well as for external procurement.

Scenario 1:

Demand of Finished Product for calender year is 1100 qty. Out of this 60% to be procured and 40 % to be in-house manufactured. Accordingly the requirement of BOM components of finished product to be procured.

Test data:

Quota Material(FERT) – M-800, BOM Component (ROH1) -T-T029, BOM Component (ROH2) -100-210

Process Steps:

  1. Create Material Master and Maintain Quota settings (Tcode : MM01/MM02)
  2. Maintain  Purchase Info Record ( Tcode: ME11)
  3. Maintain Quota percentage for the calendar year (Tcode : MEQ1)
  4. Maintain Planned independent requirements(PIR) (Tcode: MD61)
  5. Run MRP( Tcode : MD02)
  6. Stock Requirements list (MD04)

Process Steps with screen shots:


Create Material Master and Maintain Quota settings (Tcode : MM01/MM02):


For FERT material for which Quota needs to be planned. Below are the material master settings:

Lot Size – ES ( Lot for lot order quantity with splitting. (This setting is mandatory for triggering the procurement and in-house production)

Procurement Type -X

Quota arr usage – 4

Purchasing view to be selected


Lot Size ES -Config:

LC2.PNG





Maintain Info Record for the material (Tcode : MEQ1)

Info record as given below maintained for the FERT material M-800.




Maintain Quota percentage for the calendar year (Tcode : MEQ1)


Quota maintained for the FERT material M-800 as given below:

Procurement – 60%

In-house – 40%




Maintain Planned independent requirements(PIR) (Tcode: MD61)


PIR maintained for the FERT material M-800 for 1100 qty.






Run MRP( Tcode : MD02)


MRP executed for FERT M-800 through MD02 tcode.




Stock Requirements list (MD04)


As per quota settings system should calculate as given below:

Procurement Qty – 1100 * 60/100 = 660

In house Qty – 1100 * 40/100 = 440.


If we click on the Quota arrangement button it will display the allocated quota as given below:




As 60 % is procured and 40% only is manufactured, requirement of raw material to be planned for only 40% of in-house manufacturing.


Requirement of Raw Material T-T029 is as follows:


FERT In-house PIR Qty (440) * BOM Ratio (2) = 880 Qty. So PR triggered for 880 Qty as given below:




Requirement of Raw Material 100-210 is as follows:


FERT In-house PIR Qty (440) * BOM Ratio (2) = 880 Qty. Stock available is 500. Net requirement = 880 -500 = 380.

So PR triggered for 880 Qty as given below:



Conclusion:


By defining Quota % , accordingly system will calculate the procurement proposals and in-house production qty. Subsequently system will plan the lower level raw materials qty only for in-house qty requirement.


Scenario 2:

Demand of Finished Product for calender year is 1100 qty. Out of this 60% to be procured and 40 % to be in-house manufactured. Also Quota is defined for one of the raw material which is BOM item of the FERT quota material. Raw material Quota is maintained as 70 % for Vendor 1 and 30% for Vendor 2.

Process Steps:

  1. Create Material Master and Maintain Quota settings (Tcode : MM01/MM02)
  2. Create Info Record for the Raw Material (ME11)
  3. Maintain Quota percentage for the calendar year (Tcode : MEQ1) for FERT and ROH material.
  4. Maintain Planned independent requirements(PIR) (Tcode: MD61) for FERT
  5. Run MRP( Tcode : MD02)
  6. Stock Requirements list (MD04)

Process Steps with screen shots:


Create Material Master and Maintain Quota settings (Tcode : MM01/MM02): ( For Raw Material T-T029)


Lot Size -EX

Quota arrg usage – 3



Lot Size EX Config:

LT1.PNG



Maintain Quota percentage for the calendar year (Tcode : MEQ1)


Quota % maintained for the raw material as 70% for Vendor 130 and 30% for Vendor 137.




PIR maintained in MD61 for FERT material as per scenario 1 and MRP executed in MD02



Stock Requirements list (MD04)


As 60 % is procured and 40% only is manufactured, requirement of raw material to be planned for only 40% of in-house manufacturing

Also Raw material T-T029 quota maintained as 70% for Vendor 130 and 30 % for Vendor 137


Requirement of Raw Material T-T029 is as follows:


PR for Vendor 130 = FERT In-house PIR Qty (440) * BOM Ratio (2) = 880 Qty * 70 % =  616 Qty system generated PR for vendor 130

PR for Vendor 137 = FERT In-house PIR Qty (440) * BOM Ratio (2) = 880 Qty * 30 % =  264 Qty system generated PR for vendor 137


Accordingly Quota is allocated as given below:


Conclusion:


Purchase Requisition triggered for various source of supply based on Quota defined for the material. Generated PR qty consists of quota % maintained at raw material level for the in-house demand.

Also, read the SAP Note 1508647 – MRP does not consider the quota arrangement and 1947519 – Rounding with the split quota always allocates the rest to the first vendor

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      43 Comments
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      Author's profile photo Srini Ravindra Kumar
      Srini Ravindra Kumar

      Ramagiri, Know that you work with DIMP/IS-systems. Is the ES lot size a standard one provided with the IS features/options with Splitting quota indicator ON by default? Think you are referring to the same indicator as the mandatory setting here again.

      In the 2nd part you are using EX for your raw material and you definitely have manually checked ON the indicator yourself. Better to highlight the same information with a small screen shot of the indicator as past SCN queries are like quota arrangement is not working etc etc.,

      Author's profile photo Ramagiri Srinivas Rao
      Ramagiri Srinivas Rao
      Blog Post Author

      Hi Srini,

      Thanks for your analysis.

      Yes you are right. Splitting quota indicator is set ON in both ES and EX lot size.

      This process was mapped for one of the client where i created new lot size 'ZS' which is copy of EX with splitting quota indicator ON. Currently i created this scenerio in IDES Practice where ES is default available with splitting quota indicator ON, hence used the same.

      In 2nd part i used standard EX lot size for raw material. For using quota only in procurement we need to use EX only. I will add lot size screens.

      Thanks & Regards,

      Ramagiri

      Author's profile photo Caetano Almeida
      Caetano Almeida

      Hello

      Nice document, very detailed.

      Could please add a link to the following note?

      1508647 MRP does not consider the quota arrangement

      BR

      Caetano

      Author's profile photo Srini Ravindra Kumar
      Srini Ravindra Kumar

      Caetano Almeida, I do not agree to the KBA screenshot showing EX lot size with 'Splitting quota' indicator checked ON.

      For MRP the priority is

      1. Quota file/meq1 data ..if not

      2. Source list..if not then

      3.Outline agreements and Inforecord (Contracts/ SA's/Inforecords in that order) and so on with other steps as applicable.

      If we set the split quota indicator in EX,(and assuming all materials in the company are with EX) even if a material is not quota managed system tries to see MEQ1 data and then goes to next priority which is non-value adding.

      Chances of performance related issues can also be put forward in instances like Electronic OEM scenarios. That is probably the reason why SAP has left the indicator not checked ON by default.

      It is always better to have a customised lot size for Quota managed items exclusively (with the splitting quota indicator ON) and that should be the message in a KBA.

      Just a suggestion.

      ---------------------------------------

      Version2: After the N/R calculation, system does lot size calculation. So system should start that for the lotsize EX, as the splitting quota is set, check quota arrangement usage field as either 3 or 4 and if not set ignore quota arrangement and go to next option namely source list. Either way there seems to be a delay because of the splitting quota indicator.

      Author's profile photo Ramagiri Srinivas Rao
      Ramagiri Srinivas Rao
      Blog Post Author

      Hi Caetano,

      Thanks. I will include the note.

      Thanks & Regards,

      Ramagiri

      Author's profile photo Ramagiri Srinivas Rao
      Ramagiri Srinivas Rao
      Blog Post Author

      Hi Srini /Caetano,

      Included lot size screens and note included.

      Thanks for your analysis and suggestions.

      Thank & Regards,

      Ramagiri

      Author's profile photo Srini Ravindra Kumar
      Srini Ravindra Kumar

      Thanks a lot for all the clarifications Ramagiri.

      At a later date you can plan for coming out with a document on advanced options/functionalities available in quota arrangement like Max Rel qty and basically all the data that we find towards the right in the quota/MEQ1 file.

      Author's profile photo Ramagiri Srinivas Rao
      Ramagiri Srinivas Rao
      Blog Post Author

      Sure Srini.

      Author's profile photo Prabhu Sundararaman
      Prabhu Sundararaman

      Hello Ramgiri,

      Excellent document. Scenarios are well explained & your screenshots are illustrative.

      You could probably add a quota scenario where one of the materials is procured from external subcontract vendor and has a BOM.

      Regards

      Prabhu

      Author's profile photo Ramagiri Srinivas Rao
      Ramagiri Srinivas Rao
      Blog Post Author

      Hi Prabhu,

      Thanks for your comments. Will surely add at the earliest.

      Thanks & Regards,

      Ramagiri

      Author's profile photo Former Member
      Former Member

      Thanks Ramagiri. Nice document.

      Author's profile photo Ramagiri Srinivas Rao
      Ramagiri Srinivas Rao
      Blog Post Author

      Thanks Raj for your comments.

      Author's profile photo SANKET DESHMUKH
      SANKET DESHMUKH

      Hi Ramgiri,

      Scenarios are well explained & your screenshots are illustrative.

      informative document.keep posting with different topics.

      Author's profile photo Ramagiri Srinivas Rao
      Ramagiri Srinivas Rao
      Blog Post Author

      Thanks Sanket for your comments. Will work towards posting on different topics.

      Author's profile photo GYAN R
      GYAN R

      Nice Document Ramagiri Srinivas Rao.

      Thanks for sharing this document. It is very useful one.

      Author's profile photo Ramagiri Srinivas Rao
      Ramagiri Srinivas Rao
      Blog Post Author

      Thanks Gyan.

      Author's profile photo Former Member
      Former Member

      Hi,

      Good and well explained with screen snaps.

      Thanks for sharing.

      Regards,

      Narresh

      Author's profile photo Ramagiri Srinivas Rao
      Ramagiri Srinivas Rao
      Blog Post Author

      Thanks Naresh for your comments.

      Author's profile photo Muhammad Umar
      Muhammad Umar

      Nice document.

      Author's profile photo Ramagiri Srinivas Rao
      Ramagiri Srinivas Rao
      Blog Post Author

      Thanks Umar for your comments

      Author's profile photo Former Member
      Former Member

      Nice document for basic understanding..

      Bala.

      Author's profile photo Ramagiri Srinivas Rao
      Ramagiri Srinivas Rao
      Blog Post Author

      Thanks Bala for your comments.

      Author's profile photo Former Member
      Former Member

      Wow,, this is just the way i wanted.. thanks a lot keep up the good work!! 🙂

      Author's profile photo Ramagiri Srinivas Rao
      Ramagiri Srinivas Rao
      Blog Post Author

      Thanks Arun for your feedback.Glad to know that this document helped you to resolve your issue.

      Ramagiri

      Author's profile photo Santosh Sharma
      Santosh Sharma

      Hi Ramagiri,  Very nice documents

      Author's profile photo Ramagiri Srinivas Rao
      Ramagiri Srinivas Rao
      Blog Post Author

      Thanks Sharma for your feedback.

      Ramagiri

      Author's profile photo Ibrahim S
      Ibrahim S

      Hi Ramagiri,

      Very well explained document,

      Thanks for sharing,

      Kind Regards,

      Ibrahim

      Author's profile photo Ramagiri Srinivas Rao
      Ramagiri Srinivas Rao
      Blog Post Author

      Thanks Ibrahim for your feedback.

      Author's profile photo Former Member
      Former Member

      Hi Ramagiri,


      cool. Very detailed documentation. Like that.


      Cheers.

      Ray

      Author's profile photo Ramagiri Srinivas Rao
      Ramagiri Srinivas Rao
      Blog Post Author

      Thanks Ray for your feedback.

      Author's profile photo Shripad Renapurkar
      Shripad Renapurkar

      Hi ramagiri,

      nice and detailed document.

      Author's profile photo Ramagiri Srinivas Rao
      Ramagiri Srinivas Rao
      Blog Post Author

      Hi Shripad,

      Thanks for your feedback.

      Ramagiri

      Author's profile photo Prashant Deshpande
      Prashant Deshpande

      Hello,

      Excellent Document sir.

      I would like to know, what is BOM ratio?

      How did you calculate it?

      Thanks Prashant

      Author's profile photo Ramagiri Srinivas Rao
      Ramagiri Srinivas Rao
      Blog Post Author

      Hi Prashant,

      Thanks for your feedback.

      As 60 % is procured and 40% only is manufactured, requirement of raw material to be planned for only 40% of in-house manufacturing.


      Requirement of Raw Material T-T029 is as follows:


      FERT In-house PIR Qty (440) * BOM Ratio (2 number) = 880 Qty. So PR triggered for 880 Qty as given below:



      Requirement of Raw Material 100-210 is as follows:


      FERT In-house PIR Qty (440) * BOM Ratio (2 number) = 880 Qty. Stock available is 500. Net requirement = 880 -500 = 380. So PR triggered for 380 Qty as given below:


      Thanks & Regards,

      Ramagiri

      Author's profile photo Prashant Deshpande
      Prashant Deshpande

      Hi ramagiri, Thanks for quick reply. BOM ratio means the quantity of RAW material in BOM of Finished product....Right??? Thanks Prahsant

      Author's profile photo Ramagiri Srinivas Rao
      Ramagiri Srinivas Rao
      Blog Post Author

      Yes Prashant. Your understanding is right.

      Author's profile photo Former Member
      Former Member

      Hi Ramagiri,

      Good document with all details pertaining to quota arrangement.

      Author's profile photo Ramagiri Srinivas Rao
      Ramagiri Srinivas Rao
      Blog Post Author

      Thanks Samant for your feedback.

      Author's profile photo Former Member
      Former Member

      Well done Ramagiri, much helpful for beginners

      Regards

      Qazi Raheel

      Author's profile photo Ramagiri Srinivas Rao
      Ramagiri Srinivas Rao
      Blog Post Author

      Thanks Qazi for your feedback.

      Author's profile photo Former Member
      Former Member

      Hi,

      Our production Capacity is 100 Nos and we get requirement 110 nos.

      please suggest how can we create the Quata to meet the requirement.

      Requirement should be generate as per following.

      Inhouse           -     100

      Externernal     -     10

      Please suggest.

      Regards

      Tek

      Author's profile photo Aditya S
      Aditya S

      Thanks Srinivas for the document. Cheers. 🙂

      Author's profile photo Santosh Sharma
      Santosh Sharma

      Very nice document.

      Regards,

      Santosh Sharma