A particular material can be procured from different vendors depending upon the

requirement. In this way, the total requirement of a material is distributed to different

vendors, i.e., the quota is assigned to each source of supply. This is known as quota
arrangement. The key points to note about quota arrangement are as follows −
 Quota arrangement divides the total requirement of material among certain
sources of supply, i.e. vendors, and then assigns a quota to each source.
 This particular quota specifies the portion of material that is to be procured from
an assigned vendor or source.
 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
represents a valid source.
 Quota rating can be calculated by using the following formula −
Quota rating = (Quota Allocated Quantity + Quota Base Quantity)/Quota
Where Quota Allocated Quantity is total quantity from all orders that is procured
from a particular source. Quota Base Quantity is quantity from new source of
supply. Quota is total requirement of material that is given to a particular source
of supply.
 The mandatory setting before creating a quota is that the info record and the
source list should be maintained for the particular material. Also, in the material
master, the source list and quota arrangement usage check boxes should be
checked. This setting can be made in the material master by going to TCode
MM03. In purchasing view, check the quota arrangement usage and the source
list. Setting is now maintained for quota arrangement.
Create Quota Arrangement
Quota arrangement divides the total requirement of a material among certain sources
of supply, i.e., vendors. Follow the steps given below to create a quota arrangement.

Path to Create Quota Arrangement

Logistics ⇒ Materials Management ⇒ Purchasing ⇒ Master Data ⇒ Quota
Arrangement ⇒ Maintain
TCode: MEQ1
Step 1 − On the SAP Menu screen, select the Maintain execute icon by following the
above path.

Step 2 − Enter the material number and plant for which quota arrangement needs to
be maintained.
Step 3 − Provide dates in ‘valid from’ and ‘valid to’ and value in ‘quantity split’.
Step 4 − Enter the name of vendors and the assigned allocated quantity to them. Click
on Save. Quota arrangement is now maintained for the particular material.
Quota Arrangement :

As we know about source list, as well as source list, we can use quota arrangement.

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..

To use quota arrangement, we have to do some configuration, we have to maintain the

quota arrangement, then we can see the result.
Configuration

In this part, we will configure all things which is required for quota arrangement.

Define Number Ranges

Go to OMEP or path SPRO-IMG-Materials Management-Purchasing-Quota Arrangement-

Define Number Ranges

The initial screen will appear.

Click on the Intervals

Enter your number range.. You can set the number range as external or internal (Its
depend on your business process).

Then Save you data.

Define Quota Arrangement Usage

In this part, we will configure the quota arrangement uses.

Go to SPRO-IMG-Materials Management-Purchasing-Quota Arrangement-Define Quota

Arrangement Usage

The initial screen will be appear.

You can see in My system 1,2,3,4 is already created. Now I am going to create Quota
arr. Usage 5.

Click on New Entries

As you can see I have selected only Purchase Requisition but you can select these
option as per your business requirement.

Then save your data.

Now we have to give assign quota arrangement uses to material master.

Go to MM02, enter your material, select plant and in purchasing tab give the newly
created Quota arrangement uses number.
Save your data.

Create Info record

Now suppose we have 3 vendors KKNN001, KKNN002, KKNN003, they will supply the
material. and we have to use in quota arrangement as per quantity basis for these
vendors.

So we have created Info record for each vendor with regards to material.

Create 3 valid info records for Each vendor.

Create Quota Arrangement

Go to MEQ1

The initial screen will be appear.

Give the Material and Plant and then press enter.

You can see the above screen. Enter the valid to date, (Valid from date will be
automatically set as current date of quota arrangement create date)

In the option Minimum qty split, Its specify for the splitting quota (for more help, you
can press F1 on this option). You can choose as per your business process…

Now press enter.

After pressing enter, You can see the date from is appeared as current date.

Then you can choose Item or you can double click on the line item.
You can see the initial screen will be appeared for quota arrangement creation.

Here we can found many options for quota uses. We have to choose as per our business
process.

To know about every field, you can select the field and press F1 for a help topic for the
field.

I have used Maximum Quantity for quota arrangement selection.

I have set the quota arrangement like this

If I use below 20 quantity in PR, then the source of supply will be the vendor KKNN003.

From 21-50 quantity in PR, it will pick the source of supply KKNN002.

From 51-100 quantity in PR, it will pick the source of supply KKNN001.
You can see I have given quota = 3 for vendor KKNN003 and quantity 20 and its
percentage shows 50.0, it means When I use below or equal 20, then system will
propose the vendor KKNN003.

Now we will check the uses for quota in Purchase Requisition.

I have created a PR with quantity 15..

When I have pressed the Assign Source of Supply, system has proposed me the vendor
KKN003.

You can see my default vendor is came into source of supply field.

Now I have changed the quantity 25..

System will shows me a warning message

That means system wants to propose me that as per quota arrangement entry, your
prior vendor will be KKNN002.
Now when I press Assign Source of Supply, System will change the source of supply to
KKNN002.

Now I have changed the quantity to 90..

System will propose me the vendor KKNN001.

And when I press the Assign Source of Supply, system will change the vendor to
KKNN01 in field source of supply.
Now I have changed the quantity 110, as we can see in that position our quantity is
exceed against quota arrangement setup.

Now we can see system will propose the all vendors which is can be used as source of
supply not only the quota arrangement setup..
Here we can see, system is not proposing me only the vendor which is under quota
arrangement, system will propose me all vendor which can a source for this material,
and also system will gives us a warning message “Choose a source of supply”

Now we can choose a source as per our requirement.

Just click on the blank option which is left on the vendor number.
After pressing this, you can see a green indicator on the vendor.

Now press Assigned Source..

You can see the source of supply is raised as per our selection…..
How to Remove a vendor from QA List

Now suppose you have ordered some quantity to the 3 vendors..

As you can see I have placed order for all vendor..

Now Vendor KKNN002 inform us that he can’t deliver the material any more. So source
of supply should not be vendor KKNN002.

But if we order the material for qty 5 to 10, then it will shows the vendor KKNN002 as
source of supply.

In that position, we can;t delete the vendor from quota arrangement, because we have
already placed some order.

We have to just remove the quota from vendor KKNN002, so that it will not display on
source of supply..

And suppose vendor KKNN003 will delivered the rest of quantity of vendor KKNN002.

Then we can increase the maximum quantity to 30. So that when we placed order for
quantity 1 to 15, it will always take the vendor KKNN003 as source of supply.

It will be looks like that

Or if you don’t want to change the quota sequence, then you can also change the
maximum quantity.

Then it will be like this

Just change the maximum quantity as same as allocated quantity, then the vendor will
not able to use in source of supply..

If you want that the vendor KKNN001 will supply the rest of quantity of vendor
KKNN002, in that case, you can increase the maximum quantity of KKNN001 as 110.

How to Add a Vendor in QA List

Now suppose vendor KKNN004 wants to deliver the material, and you have to add the
vendor KKNN004 in quota arrangement list, so that the vendor will com automatically in
source of supply.

Suppose vendor KKNN004 inform you that he can borrow the order of maximum
quantity 7.

But the vendor has already supplied the material with quantity of 5. In that situation,
you have to entered the quantity 5 in Quota Base Qty, so in quota calculation, then
vendor will prior for just quantity 2.

Then you can add the vendor in existing QA list.

It will be looks like

In this situation, Vendor KKNN004 will be sourced for only quantity (7-5)= 2 quantity.

If you have placed order below than 2 quantity, then the source will be vendor KKNN004
and over 2 it will goes to vendor KKNN003.

Vendor Selection With Same Quota

If you vendor content the same quota in QA, then the source list will picked as per
maximum quantity..
But in that scenario, you have to maintain the sequence for maximum quantity…

Here you can see my maximum quantity is 50 for vendor KKNN001 and 500 for vendor
KKNN002. Both vendor has same quota.

When I order below 50 quantity, system will propose the vendor KKNN001 and when I
order more than 50, then system will propose the vendor KKNN002 as source of supply.

In that way, we can configure quota arrangement in our system…

Quota Arrangements :

In simple words: Distributing the requirements quantity between potential

source of suppliers (Vendors) - basing on their order fulfillment capacity.

In business terminology:

Quota arrangements allow you to define target percentages and distribute

them between two or more purchasing contracts. A quota arrangement
ensures that a contract is guaranteed both a minimum sales volume and a
percentage of the total purchasing volume of the product category or
product. A quota arrangement has the highest priority in the
sourcing process.

Quota Arrangements
Quota Arrangements means a mechanism enabling the system to compute
which source of supply to assign to a requirement for a material.

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 the quota arrangement for in-house production as well as for
external procurement. Setting quotas permits the automatic apportionment
of a total material requirement over a period to different sources.

Sources of supply can be:

- an individual vendor or outline agreement

- another plant, from which material should be procured

- a production version

Quota Arrangement Usage

The quota arrangement facilitates the determination of the applicable

sources of supply for the following at a certain time.

Purchase orders

Scheduling agreement delivery schedules

Planned orders

Purchase requisitions

Materials planning and control

In customizing activity, we specify for each material master record which

quota arrangement rule is allowed. We group the usage combinations you
have chosen under different keys.

We have to assign quota arrangement usage key to material master record

in purchasing or MRP2 view (Maintaining Material Master Record T.Code
MM01)

The quota arrangement usage determines whether a material is included in a

quota arrangement and which operations lead to a quota arrangement.
We have to maintain the quota file for the material. Here we define the
sequence of the sources of supply, the quotas per source of supply and
numerous other parameters in the quota file.

Maintaining the Quota File

A quota arrangement file consists of quota arrangement records identifying

the source (such as a vendor or an internal plant), the validity period, and
the quota allocated to each source.

We can maintain the quota file. Following are the steps for maintaining this
file.

T. Code: MEQ1

The initial screen for maintaining quota appears.

Enter the material number and the plant for the material that you want to
use to maintain the quota file and choose. The header screen for maintaining
quotas appears.

Enter the Valid to date for the quota arrangement item.

We can only define continuous validity periods for one material. In the first
interval, the system sets the current date in the Valid from field. The Valid
from dates of the other intervals are set continuously so that the day after
the end date of the last quota item is set as the start date for the next item.

If we want to work with splitting quota arrangements, we will enter a

minimum quantity here.

Double-click on the item to process.

The item screen now appears.

Here we will define the source of supply and other control parameters per
item.

Allocating the source of supply to the quota item determines the

procurement type that the procurement proposal receives. Therefore, we can
specify via the quota arrangement that, for example, 75% of a material is
produced in-house and the other 25% is procured externally.

Save entries.

Regards,
 Syed Hussain.

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Kiran. V
Sep 21, 2008 at 06:16 AM
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.

You can set the quota arrangement for in-house production as well as for
external procurement. Sources of supply can be:

an individual vendor or outline agreement

another plant, from which material should be procured

a production version

Prerequisites

1. You have maintained the quota arrangement usage for the respective
material in the material master (MRP 2 view).

2. The quota arrangement usage determines whether a material is included

in a quota arrangement and which operations lead to a quota arrangement.
You can define, for example, that only purchase orders are included in quota
arrangements or that procurement proposals created by the system in the
planning run are also included.
You define the quota arrangement usage in Customizing for Purchasing in
the IMG activity Define quota arrangement usage.

3.You have maintained the quota file for the material.

4.You define the sequence of the sources of supply, the quotas per source of
supply and numerous other parameters in the quota file.

Also follow the link to get details abt the same:

http://help.sap.com/erp2005_ehp_03/helpdata/EN/
f4/7d267944af11d182b40000e829fbfe/frameset.htm

Transactions

u2022 MEQ1 Maintain Quota Arrangement

u2022 MEQ3 Display Quota Arrangement

u2022 MEQ4 Changes to Quota Arrangement

u2022 MEQ6 Analyze Quota Arrangement

u2022 MEQ7 Delete Quota Arrangement

u2022 MEQ8 Monitoring Quota Arrangement

u2022 MEQM Quota Arrangement for Material

u2022 MEQB Start Background Job for Report RM06Q003

u2022 MM02 Maintain Quota Arrangement Usage in Purchasing View

Hi,

Go to MM02 - In "Purchasing" view, enter "Quota arr. usage" as "4" and save.

Also maintain MRP views of the material master.

Now go to OMI4 - here for MRP Lot Size (For e.g. EX), activate "Splitting
Quota" for Short-term as well as Long-term planning both and save.

Now go to MEQ1 - here for material master and plant and press enter, here
maintain valid to date and pres enter and double click on this
 Here enter Procurement as "F" (External Procurement), also enter all the
vendors and enter Quota as per requirement for all the vendors.

Prerequisite for Quota Arrangement is Purchase Info Record and Source List
must exist for the material.

Now maintain Planned independent requirement for material in MD61 and

then run MRP for the material in MD02 and check system will generate the
PRs for the material for all the vendors maintained in MEQ1.

hope it helps..

Regards

Kiran

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Ashok Kumar Telugu

Sep 21, 2008 at 07:36 AM
To set up a quota arrangement for the procurement of a material, proceed as
follows:

Master data -> Quota arrangement -> Maintain, enter the material and plant
number, press ENTER to display the overview screen for the quota
arrangement periods, Enter a validity period for quota arrangement, Enter
date until which the quota arrangement is valid. The start date is calculated
by the system. Press ENTER .

Select the quota arrangement and choose Goto -> Item overview to display
the item overview screen of the quota arrangement. Enter a quota
arrangement item for each source of supply you want to include in the quota
arrangement.

You must enter the following data.

- Procurement type

- Special procurement type, Enter k in the S column, for example, if a

consignment arrangement for the material exists with the vendor.

- Vendor number

- Procurement plant (supplying plant):

- Quota column, enter the quota assigned to each item.

Press ENTER .

The percentage distribution of the quotas is calculated and displayed

automatically by the system.

Save the quota arrangement. The system assigns a number to the quota
arrangement item automatically

Quota Arrangement :

As we know about source list, as well as source list, we can use quota arrangement.

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..

To use quota arrangement, we have to do some configuration, we have to maintain the

quota arrangement, then we can see the result.

Configuration

In this part, we will configure all things which is required for quota arrangement.

Define Number Ranges

Go to OMEP or path SPRO-IMG-Materials Management-Purchasing-Quota Arrangement-

Define Number Ranges

The initial screen will appear.

Click on the Intervals

Enter your number range.. You can set the number range as external or internal (Its
depend on your business process).

Then Save you data.

Define Quota Arrangement Usage

In this part, we will configure the quota arrangement uses.

Go to SPRO-IMG-Materials Management-Purchasing-Quota Arrangement-Define Quota

Arrangement Usage

The initial screen will be appear.

You can see in My system 1,2,3,4 is already created. Now I am going to create Quota
arr. Usage 5.

Click on New Entries

As you can see I have selected only Purchase Requisition but you can select these
option as per your business requirement.

Then save your data.

Now we have to give assign quota arrangement uses to material master.

Go to MM02, enter your material, select plant and in purchasing tab give the newly
created Quota arrangement uses number.
Save your data.

Create Info record

Now suppose we have 3 vendors KKNN001, KKNN002, KKNN003, they will supply the
material. and we have to use in quota arrangement as per quantity basis for these
vendors.

So we have created Info record for each vendor with regards to material.

Create 3 valid info records for Each vendor.

Create Quota Arrangement

Go to MEQ1

The initial screen will be appear.

Give the Material and Plant and then press enter.

You can see the above screen. Enter the valid to date, (Valid from date will be
automatically set as current date of quota arrangement create date)

In the option Minimum qty split, Its specify for the splitting quota (for more help, you
can press F1 on this option). You can choose as per your business process…

Now press enter.

After pressing enter, You can see the date from is appeared as current date.

Then you can choose Item or you can double click on the line item.
You can see the initial screen will be appeared for quota arrangement creation.

Here we can found many options for quota uses. We have to choose as per our business
process.

To know about every field, you can select the field and press F1 for a help topic for the
field.

I have used Maximum Quantity for quota arrangement selection.

I have set the quota arrangement like this

If I use below 20 quantity in PR, then the source of supply will be the vendor KKNN003.

From 21-50 quantity in PR, it will pick the source of supply KKNN002.

From 51-100 quantity in PR, it will pick the source of supply KKNN001.
You can see I have given quota = 3 for vendor KKNN003 and quantity 20 and its
percentage shows 50.0, it means When I use below or equal 20, then system will
propose the vendor KKNN003.

Now we will check the uses for quota in Purchase Requisition.

I have created a PR with quantity 15..

When I have pressed the Assign Source of Supply, system has proposed me the vendor
KKN003.

You can see my default vendor is came into source of supply field.

Now I have changed the quantity 25..

System will shows me a warning message

That means system wants to propose me that as per quota arrangement entry, your
prior vendor will be KKNN002.
Now when I press Assign Source of Supply, System will change the source of supply to
KKNN002.

Now I have changed the quantity to 90..

System will propose me the vendor KKNN001.

And when I press the Assign Source of Supply, system will change the vendor to
KKNN01 in field source of supply.
Now I have changed the quantity 110, as we can see in that position our quantity is
exceed against quota arrangement setup.

Now we can see system will propose the all vendors which is can be used as source of
supply not only the quota arrangement setup..
Here we can see, system is not proposing me only the vendor which is under quota
arrangement, system will propose me all vendor which can a source for this material,
and also system will gives us a warning message “Choose a source of supply”

Now we can choose a source as per our requirement.

Just click on the blank option which is left on the vendor number.
After pressing this, you can see a green indicator on the vendor.

Now press Assigned Source..

You can see the source of supply is raised as per our selection…..
How to Remove a vendor from QA List

Now suppose you have ordered some quantity to the 3 vendors..

As you can see I have placed order for all vendor..

Now Vendor KKNN002 inform us that he can’t deliver the material any more. So source
of supply should not be vendor KKNN002.

But if we order the material for qty 5 to 10, then it will shows the vendor KKNN002 as
source of supply.

In that position, we can;t delete the vendor from quota arrangement, because we have
already placed some order.

We have to just remove the quota from vendor KKNN002, so that it will not display on
source of supply..

And suppose vendor KKNN003 will delivered the rest of quantity of vendor KKNN002.

Then we can increase the maximum quantity to 30. So that when we placed order for
quantity 1 to 15, it will always take the vendor KKNN003 as source of supply.

It will be looks like that

Or if you don’t want to change the quota sequence, then you can also change the
maximum quantity.

Then it will be like this

Just change the maximum quantity as same as allocated quantity, then the vendor will
not able to use in source of supply..

If you want that the vendor KKNN001 will supply the rest of quantity of vendor
KKNN002, in that case, you can increase the maximum quantity of KKNN001 as 110.

How to Add a Vendor in QA List

Now suppose vendor KKNN004 wants to deliver the material, and you have to add the
vendor KKNN004 in quota arrangement list, so that the vendor will com automatically in
source of supply.

Suppose vendor KKNN004 inform you that he can borrow the order of maximum
quantity 7.

But the vendor has already supplied the material with quantity of 5. In that situation,
you have to entered the quantity 5 in Quota Base Qty, so in quota calculation, then
vendor will prior for just quantity 2.

Then you can add the vendor in existing QA list.

It will be looks like

In this situation, Vendor KKNN004 will be sourced for only quantity (7-5)= 2 quantity.

If you have placed order below than 2 quantity, then the source will be vendor KKNN004
and over 2 it will goes to vendor KKNN003.

Vendor Selection With Same Quota

If you vendor content the same quota in QA, then the source list will picked as per
maximum quantity..
 But in that scenario, you have to maintain the sequence for maximum quantity…

Here you can see my maximum quantity is 50 for vendor KKNN001 and 500 for vendor
KKNN002. Both vendor has same quota.

When I order below 50 quantity, system will propose the vendor KKNN001 and when I
order more than 50, then system will propose the vendor KKNN002 as source of supply.

In that way, we can configure quota arrangement in our system…

Thanks and Regards

Dev Patra

What is SAP MM Quota Arrangement?

A selected material may be procured from different providers depending upon the
requirement. So, total requirement of a material is sent to different dealer’s i.e. quota is
assigned to each source of supply. that is called quota arrangement. the key points about
quota arrangement are as follows:
 Quota arrangement divides the full requirement of material among
positive resources of supply i.e. providers and then assigns quota to every
supply.
 This specific quota specifies the portion of material that is to be procured
from assigned seller or supply.
 Quota rating is used to determine the amount of material that is to be
assigned to specific source or seller. The supply with lowest quota rating
represents the valid source.
 Quota rating can be calculated by using following method:
 Quota rating = (Quota allocated quantity + Quota Base quantity)/Quota
where Quota allotted quantity is total quantity from all orders that is procured
from a selected source. Quota Base quantity is amount from new supply of
supply. Quota is general requirement of material that is given to a selected
supply of supply.
 The required setting before creating quota is information record and
source list need to be maintained for the specific material. Also in material
master, source list and quota arrangement usage check field must be
checked. This placing may be made in material master through going to
TCode MM03. In purchasing view test the quota arrangement utilization
and source list. setting is now maintained for quota arrangement.
Create Quota Arrangement

Quota arrangement divides the entire requirement of a material amongst sure

sources of supply i.e. providers. Quota arrangement may be created through
following the below steps.

Path to create Quota arrangement:

Logistics => materials control => purchasing => master data => Quota
arrangement => maintain

TCode: MEQ1

On Sap Menu screen choose preserve execute icon by using following the above
step.
Enter the material number and plant for which quota arrangement needs to be
maintained.
Provide the dates like valid from and valid to and also quantity split.
Enter the name of dealer’s and assigned allocated quantity to them. click on
save. Quota arrangement is now maintained for the unique material.