Quota Arrangement

Like the source list, the quota arrangement which is an instrument used in source administration facilitates the administration of sources of supply at the plant level. If a certain material is procured from a number of different sources, a quota can be assigned to each individual source.

The quota specifies which portion of the total requirements should be procured from a given source. To be more specific, the quota arrangement indicates which share of the requirements arising from the material over a certain period is to be procured from which source.

If a quota arrangement exists for a material, it is taken into account during source determination. A quota arrangement is specified and valid for a certain period of time. A quota arrangement item is created for each source during that period.

Noted the existence of a quota arrangement does not involve the apportioning (among different sources) of an individual material requirement (that is the quantity set out in an individual purchase requisition) ie. if a quota arrangement applies, this does not mean that the quantity of a single manually created purchase requisition is automatically apportioned among different sources. In such case, the entire requested quantity of the requisition is assigned to one source – the source that is next in line to receive the relevant order – in accordance with the quota arrangement. The breakdown of requirements according to the specified quotas can only take place if material requirements planning is used. It can only be carried out with regard to aggregate, not individual, requirements.

Learn more about Quota Arrangements in this training manual.