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1. Create New Materials
Menu Path:
Logistics Materials Management Material Master Material Create (Special)
Raw Material
Transaction Code: MM01
Materials: ##P810 and ##P820
Industry Sector: Retail
Material Master Views:
Basic Data 1
Purchasing
General Plant Data / Storage 1
Accounting 1
Costing 1
Plant: ##PT
Description: ## Display Box NRG-A and ## Display Box NRG-B
Unit of Measure: EA
Material Group: MANU
Purchasing Group: ##S
Valuation Class: 3000
Price Control: V
Moving Price: 0.24
With Qty Structure: Checked
Material Origin: Checked
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2. Create New Vendor
Menu path:
Logistics Materials Management Purchasing Master Data Vendor
Central Create
Transaction code: XK01
Initial Screen
Company code: ##FS
Purch. Organization: ##PR
Account group: KRED
Address
Title: Company
Name: ## Brighton Box Works
Search term: ##
Street: Bauer Rd.
House number: 4141
Postal code: 48116
City: Brighton
Region: Michigan
Jurisdiction code: MI0000000
Accounting Information Accounting
Rec. Account: 300000
Cash mgmt group: E1
Payment transactions Accounting
Payment terms: 0001
Chk double inv.: Checked
Purchasing data
Order currency: USD
Terms of paymnt: 0001
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3. Create Contracts
Create two contracts: One for ## Portage Packaging Materials and the ## Display Box NRG-A
and one for ## Brighton Box Works and the ## Display Box NRG-A.
Menu path:
Logistics Materials Management Purchasing Outline Agreement Contract
Create
Transaction Code: ME31K
## Portage Packaging Materials
Agreement type: MK
Purchasing Org.: ##PR
Purchasing group: ##S
Plant: ##PT
Storage Location: 100
Validity end: Last day of current year
Material: ##P810
Targ. Qty: 1000000 (1 million)
Net Price: 0.24
Gross Price (PB00): 0.24
Discount (RC00): 0.02 after 1000 units
## Brighton Box Works
Agreement type: MK
Purchasing Org.: ##PR
Purchasing group: ##S
Plant: ##PT
Storage Location: 100
Validity end: Last day of current year
Material: ##P810
Targ. Qty: 1000000 (1 million)
Net Price: 0.24
Gross Price (PB00): 0.24
Discount (RA01): 10% after 2000 units
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4. Price Analysis in the PO Process
In this step, we will see how price analysis can be used in selecting a supply source for a PO. To
use price analysis to determine the vendor, we need to create the PO using the vendor unknown
transaction (ME25):
Logistics Materials Management Purchasing Purchase Order Create
Vendor Unknown
which will call up the following screen:
Check for Order type
NB and Plant ##PT
Make sure the order type and default plant are set correctly, then click on the enter icon (
get the following screen:
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) to
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Enter material ##P810, Qty
requested 500, and a delivery
date two weeks in the future,
then click on the enter icon
After clicking on the enter icon (
), select the line and click on the assign supply source icon:
Select the line, then click on the
Assign supply source icon
As there is more than one vendor available for this material, the SAP system will produce a popup window to aid in supplier selection:
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Click on Price simulation/all
In this exercise, we will use the price simulation functionality to see which vendor will be the
low cost vendor. Because of the different discounts, the low-cost vendor will depend on the
order quantity. After clicking on Price simulation/all, the following pop-up will appear:
This screen allows the user
to determine how the
pricing it to be analyzed.
Select Effective price, then
click on the enter icon
The user can define whether discounts or delivery costs are included in the price analysis. By
selecting effective pricing, we are looking for the bottom-line price, with all discounts and
delivery costs considered. Select Effective price, then click on the enter icon ( ) to get the
following analysis:
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Both vendors will
charge the same
price—no discounts are
are applied
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Click on the back icon (
) to get back to the source overview screen:
Click here to cancel
the source overview
Click on the hard to see cancel in the source overview window to close it. We want to see what a
change in quantity will do to the price simulation. Change the order quantity to 1,000 units:
Change the order quantity to 1,000 units, select
the line, and then click on assign supply source
Select the row again, click on assign supply source, then click on the price simulation/all icon
(
):
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Note best price indicator
Note that Portage
Packaging Materials is
now the low cost supplier
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Note that Portage Packaging Materials is now the low cost supplier. With the order quantity at
1,000 units, the $0.02/box discount applies.
Click on the back icon (
) to get back to the source overview screen:
Click here to cancel
the source overview
Cancel the source overview window, and change the order quantity to 2,000 units:
Change the order quantity to 2,000 units, select
the line, then click on assign supply source
Select the row again, click on assign supply source, then click on the price simulation/all icon
(
):
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Note best price indicator
At 2,000 units, Brighton
Box Works is now the
low cost supplier
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At a quantity of 2,000 units, Brighton Box works gives a discount of 10%, or $0.024, which is
more than the $0.02 that Portage Packaging Products provides, making Brighton Box Works the
low-cost supplier.
Click on the back icon ( ) to get back to the source overview screen. Cancel (without saving)
the source overview window, and click on the exit icon ( ) to cancel this transaction and return
to the SAP Easy Access screen.
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5. Create Purchasing Info Records
We will be creating a quota arrangement between ## Portage Packaging Materials and ##
Brighton Box Works for the ## Display Box NRG-B (##P820). A prerequisite to a quota
arrangement is a purchasing info record. Create the purchasing info records for both vendors and
the ## Display Box NRG-B using the following information:
Planned Delivery Lead Time: 3 (days)
Purchasing group: ##S
Standard qty: 500
Net price: 0.21
Note that, because of competition, both firms are willing to sell the display boxes for $0.21 each
as long as the minimum order quantity is 500.
The menu path to create purchasing info records is:
Logistics Materials Management Purchasing Master Data Info Record
Create
The transaction code is ME11.
6. Maintain Source List
Next, we have to add the two vendors to a source list—a list of possible vendors. The source list
allows us to set a vendor as a preferred vendor, or to block a vendor from supplying a material.
A source list is also needed before the quota arrangement can be used.
To create a source list, follow the menu path:
Logistics Materials Management Purchasing Master Data Source List
Maintain
which will bring up the following screen:
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Enter ##P820 for Material and
##PT for Plant, then click enter
This will produce the following screen:
Enter 01/01/current year for Valid from date, 12/31/current
year for Valid to date, enter both vendors (Brighton Box
Works and Portage Packaging Products) and ##PR for POrg,
then click on save.
Enter the information shown for both vendors, then click on the save icon (
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).
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6. Create Quota Arrangement
The first step in setting up the quota arrangement for a material is to specify quota arrangement
usage in the material master. To do this, we need to change the material master for the
purchasing view by following the menu path:
Logistics Materials Management Material Master Material Change
Immediately
which will call up the following screen:
Enter Material ##P820, click
on the enter icon, select the
Purchasing view, then click
on the other enter icon
Enter material number ##P820, select the Purchasing view, click on the enter icon, then select
plant ##PT:
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Enter ##PT, then click enter
This will call up the purchasing view for the ## Display Box NRG-B:
Select 2 for Quota arrangement usage
Use help (F1) and possible entries to
figure out what this setting does
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To see what the quota arrangement usage field specifies, click on the field and then call up help
using the F1 key. Click on the search icon to see what entries are possible. Can you figure out
what this setting does from the help description and set of possible entries?
Click on the save icon (
) to save this change.
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Now that the use of a quota arrangement has been specified for this material, we need to set up
the details of the quota by following the menu path:
Logistics Materials Management Purchasing Master Data Quota
Arrangement Maintain
which will call up the following screen:
Enter material ##P820
and plant ##PT, then
click on the enter icon
This will produce the following screen:
Enter the last day of the current year as the Valid to
date, and 500 as the minimum splitting quantity, then
click on the enter icon
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Specify that the quota arrangement is valid until the end of this year, and set the minimum
quantity splitting to 500 (meaning the system will not split a PO among vendors if the quantity in
a PO will be less than 500 units). Click on the enter icon ( ):
Select the line, then click on
the item overview icon
Select the line, then click on the Item overview icon (
). This will call up the following screen:
Enter F for Procurement type (F represents external procurement)
Use search to find ## Portage Packaging Products, then set the quota to
760 with a minimum lot size of 500.
Use search to find ## Brighton Box Works, then set the quota to 480,
then Quota base quantity to 500 and the minimum lot size to 500. Click
on the save icon to save
the quota arrangement
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Unfortunately, this screen only displays the vendor number and not the vendor name. Use the
search function to find each vendor and make the following settings:
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Procurement Type
Vendor
F (External)
F (External)
## Portage Packaging Products
## Brighton Box Works
Click on the save icon (
Quota
760
480
Qutoa base
qty
500
Min. lot
size
500
500
) to save the quota arrangement
7. Create PO with Source Determination
With the quota arrangement in place, we can let the SAP system determine which vendor to use
when creating a PO and the system will assign vendors according to our quota arrangement.
With the quota arrangement created in the last step, ## Portage Packaging Products will receive:
760
X 100  61 .3%
760  480
of the business for the ## Display Box NRG-B, while ## Brighton Box Works will receive:
480
X 100  38 .7%
760  480
of the business.
To see how the system selects vendors, we will create some purchase orders using the vendor
unknown method, but this time, we will set Source determination to signal the SAP system that it
should use the quota arrangement to automatically select the source for us.
To create the PO with vendor unknown, use transaction (ME25) or the menu path:
Logistics Materials Management Purchasing Purchase Order Create
Vendor Unknown
which will call up the following screen:
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Use Order type NB and check
Source determination, then
click on the enter icon
Make sure to check Source determination, then click on the enter icon (
screen:
) to get the following
Enter material ##P820, Qty requested of 1000, a delivery
date two weeks in the future and storage location 100,
then click on the enter icon
Enter the information shown above, then click on the enter icon (
click on the Generate purchase order icon ( ):
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). Next, select the line and
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Select line, then click on the
Generate purchase order icon
Because we specified Source determination, the SAP system has already assigned the supply
source using the quota arrangement. After clicking on the Generate purchase order icon ( ), we
will go to the main create purchase order screen, with a requisition created for the vendor
selected by the quota arrangement:
The quota arrangement created an Open
requisition for ## Portage Packaging
Materials. Click on the requisition to
select it, then click on the Adopt icon
The quota arrangement process selected ## Portage Packaging Materials because we set the
quota base quantity to 500 for ## Brighton Box Works. The quota rating formula is:
Quota Rating 
Quota allocated qty   Quota Base qty 
Quota
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So the quota ratings for the vendors for this first purchase order are:
Vendor
Quota Rating
## Portage Packaging Materials
## Brighton Box Works
00
0
760
0  500
 1.04
480
The SAP system selects the vendor with the lowest quota rating, in this case, ## Portage
Packaging Materials. The Quota base quantity had its intended effect—to make sure that the
first PO went to ## Portage Packaging Materials and not ## Brighton Box Works.
After the requisition is copied into the purchase order, click on the save icon (
purchase order, ignoring any warnings:
) to save the
Save purchase order,
ignoring any warnings
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8. Check Quota Arrangement Report
The SAP system provides a report that summarizes the quota arrangement status. To access this
report, follow the menu path:
Logistics Materials Management Purchasing Master Data Quota
Arrangement List Displays By Material
which will call up the following screen:
Enter material ##P820, then
click on the execute icon
Enter material ##P820, then click on the execute icon (
report for the ## Display Box NRG-B:
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) to generate the quota arrangement
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The heading in the
second line applies to
the second line of
each vendor listing
This quota report shows that the first vendor (## Portage Packaging Materials) has a Quota base
quantity of zero, Quota-allocated quantity of 1,000 (the quantity in the PO that was just created)
and a Quota of 760. For ## Brighton Box Works, the Quota base quantity is 500, the Quotaallocated quantity is 0 and the Quota is 480. For the next POs, the quota ratings will be:
Vendor
Quota Rating
## Portage Packaging Materials
## Brighton Box Works
1000  0
 1.32
760
0  500
 1.04
480
So the next PO should go to ## Brighton Box Works.
9. Create a Second PO using Source Selection
To confirm that the Quota arrangement is working as planned, repeat the PO process from step 7.
This time, the source selection process will pick ## Brighton Box Works:
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Adopt the requisition, then save the purchase order
Adopt the requisition, then click on the save icon to save the PO.
Run the quota report by material, using transaction code MEQM or menu path:
Logistics Materials Management Purchasing Master Data Quota
Arrangement List Displays By Material
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 Print out a copy of this report.
 Calculate the New Quota Rating for Each Vendor, and
write this on the report.
 Circle the number of the vendor that will receive the
next PO using the Quota Arrangement
 Write your name clearly on this report and hand it in.
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