Introduction
As you know SAP implementation is nothing but re-engineering of existing business processes into SAP R/3. All most each and every industry specific solution has been taken under the umbrella of SAP R/3. Each and every modules of SAP is integrated with other for the common purpose of sharing the data and information already available into the system. In addition to the already available data in the system, during implementation phase of SAP a lot of master data is migrated from legacy system to SAP.
Information related to these master data is being used in almost every modules of SAP. For MM module, Vendor Master and Material Master are being migrated to the SAP as the Master Data.
In addition to this, the following purchasing master data is also maintained towards optimization of purchasing which is being used and re-used again and again for source determination:
- Purchasing info record
- Source list
- Quota arrangement
Source Determination
So before you get into the purchasing transaction you have sufficient purchasing data. With respect to new procurement transactions in SAP, you initially wish to fall back on data that is already available in the system. If no data is available in the system for a certain material or service or for a source of supply you can opt for traditional method of determining a new source through the requesting and processing quotations. If your organization is not into the SAP then it can be a very time consuming and repetitive activities, but if it is into SAP, then it is only one time activity and maximum information related to vendor and material can be used again and again.
As a rule, a standard productive system which procures the material internally and externally will have a large number of vendors and outline purchase agreements as internal and external sources of supply. So if your organization has more than one source of supply for a certain material or service, then buyer have to find out the most suitable source out of available sources. To meet this requirement and to help the buyer the SAP provides the source determination facility to find the most suitable source for a certain requirement from the large volume of data that is available, i.e. it suggests a suitable outline agreement or vendor/supplying plant for ordering purposes.
Possible Sources of Supply
In standard SAP all the available sources of supply has been categorized as follows: Some of the organization may make the use of all the below mentioned categories or they may choose any one or more as per their business requirements;
- Outline agreement
- Info record
- Supplying Plant
- Quota arrangement
- Source list
Order of sources for Source Determination
Since you have more than one category available in the system and each category may have a large number of sources available under it so there is a strong need to priorities all these categories based on the order system should look for these.
The standard SAP system determines the possible source of supply of a requested material in the following order:
Quota arrangement
The system first determines whether a quota arrangement within whose validity period the delivery date in the requisition falls exists for the material. If a quota arrangement exists, the system determines the vendor from whom the material is to be procured according to the quotas assigned to the vendors and then suggests the source.
If no source can be determined on the basis of Quota arrangement then the system checks the source list.
Source list
The system determines whether an entry in the source list within whose validity period the delivery date of the requisition falls exists for the material. The source in question may be a fixed vendor or an outline agreement (contract or scheduling agreement). If the source list contains a unique source, the requisition is assigned to that source. If several sources are found, a box appears for selection purposes. Buyer can choose one out of it. If no source could be determined from source list, then the system checks all the existing outline agreements and info records.
Outline agreement and info record
The system searches for contracts, scheduling agreements, and info records for the material and suggests these. If several outline agreements (contracts, scheduling agreements) and info records exist for a certain requirement, all possible sources are offered for selection in a box. Buyer can choose one out of it.
When an info record is found, the following two additional checks are carried out:
- For supply region
- For regular vendor
Source Determination in the Background
During source determination process in the background, the system checks all the available source of supply in the same order as mentioned above. If the system finds more than one source of supply out of quota arrangement or source list, then system determine a unique source out of these to enable a purchase order to subsequently be generated automatically. If several sources are found at outline agreement and info record level then system gives the outline agreement precedence over the info record in order to arrive at a unique source. If two outline agreements are found, the system checks whether one of them is with a regular vendor. If so, this agreement is assigned as the unique source. If during the above process system does not find and assigned a suitable source of supply to the requirement (automatic purchase order), then you must assigned the source manually.
