The purpose of the source determination process is to automatically assign a source of supply to a purchase requisition. If the requester has set the Source Determination indicator in the requisition header, the system searches for possible source of supply for all the items of the requisition. If the system finds several valid sources for an item, the decision process can be supported by a price simulation or by reference to data from the vendor evaluation facility.
To have the system assign a single unique source during the automatic source determination process, a source list and/or a quota arrangement can be made use of.
In the source list, it is required to specify which source of supply is valid for a certain period of time. It is also possible to specify a preferred source as fixed for a certain period in the source list. In automatic source determination, the system will then suggest just this source, even if other potential sources exists.
With the aid of a quota arrangement, it is feasible to have material requirements arising over a certain period divided up among different sources on the basis of quotas. Quota arrangements determine which source of supply (maybe from among several possible ones) is automatically assigned to a purchase requisition.

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The basis of the reorder point planning is the comparison of the available MRP stock (total from plant stock and the fixed receipts) with the reorder point. If the available stock is less than the reorder point, then procurement is triggered.
In reorder point planning, as a rule, only the shortfall of the reorder point causes a planning file entry during reorder point planning, and this then triggers net requirements calculation. To avoid over-planning, sales orders, dependent requirements, reservations, and so on, are not generally included in the net requirements calculation, as these future requirements have already been scheduled with the reorder point.
The reorder point should cover the expected average material requirements during the replenishment lead time.
The safety stock should cover both excess material consumption during the replenishment lead time, and the additional consumption caused by delayed deliveries. The safety stock is part of the reorder point.

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Like the source list, the quota arrangement which is an instrument used in source administration, facilitates the administration of sources of supply at 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 for 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.

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Serves as a source of information for Purchasing. The purchasing information record (also referred to in abbreviated form as the “info record”) contains information on a specific material and a vendor supplying this material. It can contain data such as the vendor’s current price for the material. The prices and other data stored in the info record are used as default values in documents such as purchase orders. The info record allows buyers to quickly determine:

• Which materials have been previously offered or supplied by a specific vendor.
• Which vendors have offered or supplied a specific material.

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Once the Purchase Requisitions are generated, additional standard functions are provided by the SAP System for converting these requisitions into respective purchasing documents (purchase orders, contract release orders, scheduling agreement delivery schedules, RFQs) as well as the processing options available thereby in this document.

• Assigning means defining the desired source for each purchase requisition item ie. this involves assigning source of supply to individual requisition items.
• Further processing (of purchase requisitions via the assignment lists) involves generating lists of requisitions that have been assigned or flagged as outlined above, and the subsequent creation of RFQs, purchase orders, or lines of delivery schedule under scheduling agreements. This involves the manual creation of purchase orders or delivery schedule lines from a list of requisitions with assigned sources.

Alternatively, in the case of purchase requisition items that were not assigned to sources at the time of their creation, it is optional of carrying out the processes of source assignment and conversion collectively using a single transaction. This function is a combination of “Assign Purchase Requisitions” and “Further Processing of Purchase Requisitions via the Assignment List”. In this case, choose Purchase Requisition –> Follow-On Functions –>Assign and Process.
It is possible to trigger the automatic assignment of sources for all selected purchase requisition items from a list of open requisitions (Edit –>Source of Supply –>Assign Automatically). In this case, the system will help determines possible sources. If there are several possible sources of supply of a material, it is feasible to choose the desired one from a list of all possible sources in the ‘Dialog’ box.
If more than one requisition is selected for assignment, the box for the next requisition with more than one possible source appears. Repeat the process until all requisitions have been assigned to sources.
It is also probable to assign manually requisitions for which no source can be found to a vendor (Edit  –> Source of Supply  –> Assign Manually) or flag them for RFQ processing (Edit  –> Flag for RFQ –>Without Vendor / With Vendor).
After such assignment phase, either these requisitions can be saved with assigned sources, or the assignment list is generated in the second step (Go to –>Assignment Overview), in order to convert the assigned items into Purchase Orders, Scheduling Agreement delivery schedule lines, or RFQs.
To confirm the assignment of selected items from within the basic list, choose Edit  –> Change requisitions. The system will issue a message confirming that the requisition(s) has/have been changed. Noted that if requisitions that have already been assigned are selected, and the automatic source determination process identifies a different source than the one already entered, the previous source is overwritten without prior warning. However, if the original assignments are reinstated for the requisitions, then choose Edit  –> Cancel assignment.

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