Home‎ > ‎SAP PP / PPPI‎ > ‎SAP MRP‎ > ‎Learn SAP MRP in 11 Steps‎ > ‎

SAP MRP - Step 9 - Determination of the type of Procurement Proposal in a SAP MRP Run

Study Material Contributed by Ulhas Kavle - Senior SAP Consultant

Step 9:


Step 9:

Determination of Procurement Proposal types


When a procurement proposal is created in the MRP run (as explained in the last steps), it is has to be marked as inhouse production planned order or an external procurement planned order or an external procurement purchase requisition or external procured delivery schedules. The determination of the type of procurement proposal that needs to be creaetd is decided in this step. So the following are the summarized activities of this step:
a) Determing the type of procurement proposal - Planned order, Purchase requisition or delivery schedules.
b) Calculation and allocation of quotas.
b) Working out the special procurement procedures for the procurement proposals, such as widthdrawal from alternate plant, production in another plant, subcontracting, phantom items, indirect prodcution procedures, stock transportation.

Determining the type of procurement proposal



After going through the calculations as explained above, SAP MRP run creates procurement proposal – either a planned order a purchase requisition or a scheduling agreement. When creating the procurement proposals the system checks the procurement type of the materials i.e., it checks whether it is an externally procured material or an internally produced item.


This is carried out by checking the procurement type in the MRP 2 view. If the procurement type for a material is “F” – Externally procured item, the system creates a planned order or purchase requisition based on the choice made in the planning run parameters. And if the Procurement type of the material is “E”, then a planned order is created in the planning run.


But if the procurement type of the material is “X”, the system would creates a planned order to cover the shortages and gives the user an option to create a production order or a purchase requisition/purchase order out of it. If quota arrangement exists then you can have a certain percentage produced and a certain percentage procured.



Note Before creating the procurement proposals


a)      A check made to ascertain whether the material is assigned with a special procurement key specifying special procurement procedures. The special procurement requirements can be procurement from alternate plant or withdrawal from an alternate plant, or marking the material as a phantom material, subcontracting the material, procurement of the material through a stock transport order etc.


b)      A check made to ascertain whether the material has any special quota arrangement requirements, as maintained in the quota configuration and quota master data.


Outcome of this step: At the end of this step, SAP has a procurement proposal which has the estimated quantities, dates. Though what is not known yet, is, whether the procurement proposal is for external procurement or for internal production. The Procurement type for a material in MRP views would decide that for the MRP program as explained below. 

Use of Quota Arrangement


Use of Quota Arrangement

This is optional Functionality – less used by companies –



When creating the procurement proposals, the system also makes a check for existence of a Quota arrangement for the material, so that it can split the procurement quantity between the sources of supply.


Quota arrangements are created for materials which are to be procured through multiple vendors – splitting the procurement between multiple sources.


Quota arrangements can be set for in-house production or external procurement. Quotas can be set for vendors, plants or for production versions.




Configuration required in Quota Arrangement



Configuration of the Quota arrangement usage is mandatory for the use of quota arrangement. The quota arrangement usage is ultimately assigned to the material (Purchasing view or MRP 2 view) to declare that the particular material is to be planned using the quota arrangement functionality.


The Quota arrangement usage allows you to select whether you want quota arrangement, for a given material to be activated and the split percentage calculated, for the total quantity at a given point in time, for the following objects:


  • created purchase orders
  • created schedule lines
  • manually created planned orders
  • manually created purchase requisitions
  • MRP created planned orders/purchase requisitions
  • Production orders/Process orders







Types of Quota arrangements



  • Allocation Quota Arrangement – Where the total requirement quantity is awarded to a single given source depending upon factors such as quota – proportion value entered for the source, Quota base quantity, value, quota allocated quantity ( - historical summation of total quantity procured from the source).


The following formula, which calculates the “quota rating”, is used to award the total requirement quantity to one given source which is calculated with a lowest quota rating: Quota rating = (Quota-allocated quantity + quota base quantity) / Quota


  • Splitting Quota Arrangement – Where the total requirement quantity is spilt up between sources depending upon criteria such as – the priorities maintained for the sources, the sequences of the sources included in the quota arrangement master data, quotas defined for the sources.


Splitting Quota arrangement logic mandatorily requires a “special lot sizing procedures” to be allocated in the material master’s MRP 1 view, called “Lot sizing procedures with splitting quotas”. The split lot quantity that would be allocated to a source can be calculated as (Quota for the source X Total requirement quantity) / (Sum of the quotas for all the sources). You are also required to enter a “minimum lot splitting quantity” that can be ordered from a source. The lot quantity cannot be below this specified quantity.


If the Requirement itself < min lot size or Requirement qty calculated after splitting (in the process of splitting) < min lot size, then the source arrived at, by the allocation quota arrangement using the lowest quota rating is awarded the quantity without any further split.





Master Data required in Quota Arrangement



Defining a Quota Master data for the material is the next step in the process. It helps to define the sequence and quotas to be allocated to the sources of supplies. The quota arrangement master data is updated after every planning run to help the next planning run know about the current situation.


·         The Quota arrangement has a validity period in the quota files, also and should be valid for the delivery date of the procurement proposals.  


·         In case of external procurement, the vendor should be MRP relevant and it should exists in the source list (if you source list usage is selected for the quota arrangement)


·         The rounding profiles, minimum and maximum lot sizes entered in the material master are overridden by that entered in the quota arrangement master data for the material.  





Maintenance of Quota arrangement master data



For a given Material, you have to define the sources and the quotas, sequences and priorities allocated to them. Each of the sources can be entered on a line item. Following Table explains the fields available to best define a source on each line item.





Definition and Explanation


Procurement type of the Source


Defines the Procurement type of the source. You can define a percentage to be procured through an external vendor and the other to be produced in-house


Special Procurement type


Defines whether you want to assign any special procurement type or method for the source


Vendor Name


In case of external procurement enter as the procurement type, you must enter a vendor number as a source


Production Plant


In case of in-house production entered as a procurement type, you must enter a plant code as a source


Production Versions


In case of in-house production, you can alternatively define a Production version for the material to understand the plant, lot sizes restrictions, BOM and task List to be used for the source


Quota to be allocated


You can define a certain portion of a total that can be allocated to a source. For example, if you have 4 sources, and you enter “1” in this field, the system would automatically calculate the % allocated to a single source as “25%”.


The Percentages value (the next field) is calculated automatically in the way as explained above




Calculated automatically as explained above.


Allocated Quantity


Allocated quantity defines the total quantity of the material, which is procured or produced till now. (now -  being the current date)


Maximum Quantity


This field can be used for the source, to define its maximum quantity allowed for procurement or production.


If the quantity calculated to be arranged from this source, equals or exceeds this maximum quantity entered here, then the allocation is not made to this given source. The system goes in search of the next source, in such a given case.


Quota Base Quantity

Using a base quantity figure, you can govern the quota-allocated quantity to a source, since the quota allocated quantity is derived using the following formula.



Maximum Lot size per Quota Item



Maximum Lot size of a quota, specifies that the total requirement has to be split in to chunks of a given maximum lot quantity and the remaining quantity smaller than the maximum lot size defined will become a part of a last smaller procurement proposal.


Minimum Lot size per Quota Item



Minimum Lot size of a quota specifies the minimum quantity that can be allocated to a source. If the minimum value is specified then the source can be allocated with a procurement proposal lesser than the minimum lot size quantity.


In a case when the requirement quantity is smaller than the minimum lot size, then the source will be awarded a procurement proposal with at least the minimum lot size quantity.


Rounding Profile


A rounding profile helps you to round the quantity of the proposal to specified threshold quantities entered in the rounding profile configuration.


Only Once Indicator


One given Source can be rewarded a procurement proposal only once while calculating the sources in a quota arrangement calculation run for a given requirement.


The “only once indicator comes into play when you have entered a “max lot size” allowing the same source (which apparently has a lower quota rating) to be allocated with chucks of lots in order to satisfying the requirement.







Special Procurement Procedures

Special Procurement Types/Procedures:



Special procurement type is used for allocating a material for special procurements functions such as:



a) Withdrawal from another plant:



For manufacturing a product in Plant 0001, you can withdraw a component directly from Plant 0002 (called a planning plant or the issuing plant). Dependent requirements for these components are directly created in the issuing plant.


You can use withdrawal from alternative plant for both components produced in-house and procured externally. A special procurement key is defined for both procedures and the issuing plant is entered there. This special procurement key is assigned to that component which is to be withdrawn from the plant 0002.


Dependent requirements for the component is created in plant 0001 as well as plant 0002 and when the planned order for manufacturing is converted to a production order these dependent requirements are converted to dependent reservations in both the plants.


MRP will show the dependent requirements with an MRP element called as “Withdrawal from alternate Plant”



b) Production in alternate plant:



The planning of the product is carried out in the planning plant but it is actually produced in the production plant. The product's BOM is created in the production plant.


The special procurement key has to be created in configuration.


The special procurement key has to be assigned to the assembly’s material master of the planning plant (MRP 2 view).



Production in Alternate Plant

Planning Plant

Producing Plant

The special procurement key has to be assigned to the assembly’s material master of the planning plant (MRP 2 view).



Step a) The Material requirement planning is carried out for the assembly in the planning plant.



Step b) Planned order created in planning plant



Step c) Routing of the production plant can be used for scheduling this planned order.


Step c) BOM explosion can be carried out in production plant for material requirement planning.



Step d) Planned order à Production order in Planning Plant




Step e) Dependent Requirements are created in production Plant



Step f) Dependent Requirements are converted à Dependent Reservations in Production Plant



Step g) Production is started in Producing Plant


Step h) Goods Receipt is created for the production order of the producing plant in Planning Plant






c) Planned Stock transfer



Values predefined are used to identify the unique route from the requesting to the supplying plant in the same company code (which will be used for the Stock transport orders between two plants)


It should be noted that the Special procurement type of this category has to be entered for the material in the requesting or demanding plant.


In Customizing, when you would create a special procurement type for the requesting plant, you would have to enter “U” for the fields – Special Procurement and enter the supplying plant in the plant field.


Planned stock transfers are MRP driven. A Shortage in receiving plant creates a Stock Transport requisition or planned order in the receiving plant with a Purchase requisition raised on the Supplying plant for release of these materials to the demanding plant for the requirement date.


Example - Z1 is the Special Procurement type predefined for materials requested by plant X from plant Y (Plant Y à Plant X).


This value Z1 is maintained for the material in the requesting or demanding plant and not in the Supplying Plant.


The below table explains the step by step methodology of stock transfers:




Planned Stock Transfer

Plant X

Plant Y

Step a) Requirement for -200 Units raised in Plant X through MRP.



Step b) Stock Transport requisition or planned order of type “NB” is raised in Plant X to cover these 200 Units.




Step c) Purchase requisition or planned order is raised in plant Y for -200.



Step d) Goods are procured or manufactured in Plant Y to meet the 200 Units as per the Procurement type indicator for the material there.

Step e) The Stock Transport Requisition is converted to Stock Transport order in Plant X or the planned order is converted to Purchase requisition (PR) and then the PR is converted to Purchase order in plant X.




Step f) Transfer of goods through a transfer posting with reference to the Stock Transfer Purchase order is created once the goods are available in Plant Y for transfer to plant X.


To do this, you can create a direct transfer plant to plant and put the stock in transit or you can create an outbound delivery and post goods issue to the outbound delivery in Plant Y.


Step g) At the Receiving Plant X, you have to create a Goods receipt for the STO through MIGO against the Stock transport Purchase order.





d) Phantom Item:



If a material is to be identified as the Phantom material, you have to enter a standard special procurement type – “50” in the material master of the plant where the material is defined a Phantom.



e) Direct production (for Collective order processing)





In direct production scenario, the whole assembly is collectively produced and the cost of production is collectively calculated and booked on the highest level order. Along with cost of production the scheduling is also carried out jointly for all the products in the hierarchy.


All the levels are connected to each other in a multi level collective order.





a) Use is restricted to Made to Order Production.



b) Special Procurement key configuration:


In Customizing, the system creates a special procurement key for direct production as standard. The special procurement key contains the procurement type E for in-house production and the direct production field is selected.

You can create a further special procurement key by setting the special procurement type P for Production in alternative plant as well as entering the production plant in addition to making the direct production settings. The settings work in addition to each other and do not block each other. This is how you create a multi-plant collective order.



c) Assigning of SPK to the Materials:


Assign the special procurement key – 52, for direct production in the MRP 2 of the component.


You can restrict the use of the Collective design of direct production to a certain BOM. To achieve this enter this key for the BOM items in the MRP data area.  



d) Order type Configuration:


In order type configuration (Customizing for Shop Floor Control, by choosing Master data à Order à Define Order Types) you can use the indicator “Coll.ord.process” to determine how costs are to be settled in the collective order.


Also, if the indicator “Collective order with goods movements” is set, then the goods receipts and goods issues between assemblies happen automatically. On Production of the Lower level subassemblies, the goods receipt is created and the same is automatically goods issued to the higher level order.



e) Planned order in direct production:


Planned orders for each level is created in the system and names them as “Planned orders for direct production”. When you convert the planned order in to production order for higher level all the dependent planned orders are also converted in to production.


Every planned order for direct production contains the number of the superior planned order as well as the number of the leading planned order.






Order number

Start Date

Finish Date

Auto Goods issue

Auto Goods Receipt

Cost of MFG

Cost added up to the higher Level

Level 1


30th Dec

31st Dec





   Level 2


28th Dec

30th Dec





       Level 3


27th Dec

28th Dec





           Level 4


25th Dec

27th Dec







Behavior of costs:


The confirmation of yield in the subordinate order has the result that costs are credited to the subordinate order and costs are debited from the superior order. Goods receipt with reference to the subordinate order would therefore lead to costs being debited twice from the superior order.