Quota Arrangement

A particular material can be procured from different vendors depending upon the requirement. In this
way, the total requirements of material are distributed to different vendors, i.e., the quota is assigned to
each source of supply is known as a quota arrangement.
Quota rating is used to determine the amount of material that is to be assigned to a particular source or
vendor. The source with the lowest quota rating is called a valid source.
Quota rating = (Quota allocated quantity + Quota Base Quantity)/Quota

Step 1: Change material by selecting quota arrangement and source list in purchasing view.

Quota Arrangement Usage: It determines whether a material in a quota arrangement and which
operation lead to a quota arrangement. For example, you can define quota arrangement to only
purchase order.

Step 2: Create Purchasing info record for material 1 and vendor A and B

Step 3: Create Source list.

Step 4: Create quota arrangement (MEQ1)
I have maintained quota arrangement and maintained quota to different vendors as shown below percentage wise
as per quota rating here.

Step 5: Create PO.

Quota rating for vendor A = (Quota allocated quantity + Quota Base Quantity)/Quota

Quota rating for vendor B = (Quota allocated quantity + Quota Base Quantity)/Quota

Hence, PO & PR placed to the vendor with LOWEST Quota rating.

Quota Arrangement


1. What is Purchase Order in SAP?

Purchase order in sap is a type of legal contract which binds the supplier to supply the described materials or services & purchaser to pay after receiving the described materials or services.

So purchase order should contain

  • A Vendor/Supplier.
  • Purchase Organization structure like -Who is the contact (Purchasing group/Purchasing organization etc).
  • Material details.
  • Delivery date.
  • Quantity
  • Price
  • Delivery cost
  • Taxes.
  • Delivery address

There are different types of purchase orders in SAP

  • Standard Purchase Order
  • Stock Transport Order (STO)
  • Consignment Purchase Order
  • Subcontracting Purchase Order

2. Standard Purchase Order

Standard purchase order specifies the materials being procured, their quantity, agreed price and delivery date.

Standard PO does not has and type of special purchasing like subcontracting or consignment purchasing where purchaser is not charged till they withdraw the materials for actual consumption.

Configuration of standard purchase order

2.1 Define Document Types for Standard Purchase Orders

Purchase Orders are managed as document types in SAP

Document types decides a lot of factors.

For our car business, we will use standard document type “NB” for standard purchase orders

SPRO –> Materials Management –> Purchasing –> Purchase Order –> Define Document Types for Purchase Orders

Picture : NB Document Type

Select “NB” and click on “Allowed Item Categories”

2.2 Item Category

Item category defines how the procurement of a material or service item is controlled.

For example – Item category determines the field selection or determines whether a goods receipt or invoice receipt is to follow.

There are below item categories available

  • Standard
  • Consignment
  • Subcontracting
  • Third-party
  • Stock transfer
  • Service
  • Material unknown
  • Material group
  • Text

2.3 Confirmations

Confirmations represents the notification from the vendor to the purchaser regarding the status of a purchase order.

Confirmation covers all types of communications sent by a vendor (external supplier) to the purchaser.

A vendor confirmation

  • Can be an order acknowledgment,
  • Can be a loading or transport confirmation
  • Can be a shipping notification.

Confirmations enable the purchaser to plan more exactly due to receipt of up-to-date information the expected delivery. from the vendor.

2.3.1 Define External Confirmation Categories

External confirmation categories are sent by the vendor through EDI etc.

Example of confirmation categories sent by vendor

  • AB-Order Acknowledgment
  • CH-PO change
  • GW-Rough GR
  • LA-Inbound Delivery

2.3.2 Define Internal Confirmation Categories

In this step, an external confirmation category is assigned to each internal confirmation category.

This assignment is required for system to be able to recognize which confirmation category represents order acknowledgments and which one represents shipping notifications.

This is configured as per below screenshot

SPRO –> Materials Management –> Purchasing –> Confirmations –> Define Internal Confirmation Categories

Picture : Define Internal Confirmation Categories

2.3 Set Up Confirmation Control

Confirmation control in the form of Confirmation control key for PO items can be defined with just one confirmation category (e.g. shipping notification) or a confirmation control key covering several confirmation categories (order acknowledgment, loading confirmation, shipping notification).

SPRO –> Materials Management –> Purchasing –> Purchase Order –> Confirmations –> Set Up Confirmation Control

Picture : Set Up Confirmation Control

Now select Confirmation control key “0004” and click on confirmation sequence.

Picture : Conf. control key 0004 configuration 

2.4 Create Standard Purchase Order

We will create a standard purchase order now

Start ME21N

2.4.1 PO Header

First fill the PO header fields as shown in the below screenshot

  • Purchasing Document Type – NB (Standard)
  • Vendor-PA01VEN03 (Levine Auto Parts Norwalk).
  • Purch.Org-PA10
  • Purchasing Group -PA
  • Company Code -PA10
Picture : PO Header Creation

2.4.2 PO Line Item

Below main fields are available to input in PO line item

  • Item Category – Blank as we are creating standard PO as described above.
  • Material -66
  • Plant -PA10
  • SLOC-PP1A (Defaulted from Material Master)
  • PO Quantity – 1 PC
  • Price – 14 USD/PC (From info record)
Picture : PO Line item

2.4.3 PO Line Item Details

There are several tabs giving different details for PO line item.

We can select the line item in drop down for which we are checking the details as shown in the below screenshot

Picture : Selection of PO item in drop-down “Material Data” Tab

Main information in this tab are batch & “Info-update” indicator

Picture : “Material Data” Tab “Quantities/Weight” Tab

In this tab material information related to weight and volume flows from the material master records.

Also system multiplies weight & volume from the material master by the PO quantity to show the total PO weight & volume.

Picture : “Quantities/Weight” Tab “Delivery Schedule” Tab

In this tab , system shows delivery date and related information. for STO this tab shows schedule line type information with committed quantity as per the availability check.

Picture : “Delivery Schedule” Tab “Delivery” Tab

In this tab system shows further information related to delivery like what is the under-delivery or over-delivery tolerance, reminders etc. All these information flows from the purchasing value key.

Picture : “Delivery” Tab

2.4.3 “Delivery Address” Tab

In this tab, delivery address which is generally plant address is copied from the plant configuration and presented.

Picture : “Delivery Address” Tab

Here confirmation control in the form of Confirmation control key for PO items is defined with just one confirmation category (e.g. shipping notification) or a confirmation control key covering several confirmation categories (order acknowledgment, loading confirmation, shipping notification).

As configured earlier, we have assigned confirmation control key “0004” in our PO item.

So we have to create inbound delivery to do the goods receipt instead of MIGO.

Picture : “Confirmations” Tab

PO is created now

Picture : PO is created