Own production vs. external procurement

[rafael_zaragatzky]

Hi,

I have a client with the following requirement. They can produce a material or buy it. If the required qty is 5 pcs or fewer, they want to produce themselves; otherwise they prefer to buy. Sounds pretty natural requirement for me.

They have tried maintaining a quota arrangement in SAP ERP: one item with proc. type E and max. lot size of 5 and one item with proc. type F and min. lot size of 6.

The result in case e.g. 8 pcs are required is that MRP generates two procurement proposals: a planned order for own production for 5 pcs and a PReq for 6 pcs. This is completely according to the documentation of the fields min. and max. lot size in the QA... but this is not what the client wants.

Any ideas how to achieve what they want? Maybe some user exit? Can APO help?

TIA

Raf

[former_member846]

Hi Raf

If we maintain the procurement type as X- Both Procurement types for the material, then system will create planned order after MRP RUN for the customer demand . Based on the business need, either we can convert the planned order to production order (own production) or purchase requisition (external procurement).

Thanks & Regards,

Ramkumar RV

[rafael_zaragatzky]

Thank you, Ramkumar, for this idea. This is quite far from what the client expected (automatic selection), but maybe something to proceed with.

BR

Raf

[rafael_zaragatzky]

Hi,

Just want to share with you the best idea I got until now (from a colleague of mine).

Have two production versions the material, one with internal operation and one with external. In the production versions you can limit the lot size. Then let MRP create always planned orders for own production - they will be converted to production orders for own production or for external production dependent on quantity.

The client would still prefer a "clean cut" between own production and purchasing that would also allow to reuse existing info records, but this solution is feasible too.

BR

Raf

[rupesh_brahmankar3]

Hello,

As suggested by an expert Caetano, it should work.

Please make sure In t-code OMI4, the indicator "Splitting quota" can be set for lot sizes.

For more details please refer SAP note 2606774 - FAQ - Quota arrangements in MRP

Best Regards,

R.Brahmankar

[rafael_zaragatzky]

Thank you, R.Brahmankar.

I have now created new lot sizing key which is a copy of EX but with the Splitting quota indicator - just in order to see how it works.

It doesn't help: the system still behaves like above and creates PReq's even if the requested qty is below the minimum split qty. I believe this is also according to design. If I read the help text for this field it says (bold marking is mine):

" Specifies for the splitting quota the minimum quantity that a lot must have in order to be apportioned among several sources of supply in the planning run. If the lot is smaller than or equal to the minimum quantity, the system will proceed on the basis of the usual quota arrangement logic."

Since I have only one external source in the QA, it doesn't really matter if the system splits or doesn't split - the QA is always used and the entire qty goes to the only source defined there.

BR

Raf

[Caetano]

Hello

I don't think that the minimum lot size is the key to resolve the issue.

When you create a quota arrangement, there is a field called minimum split quantity and the quota arrangement will only be considered when the generated replenishment proposal is above this quantity.

Therefore, you can define the default procurement in the material master as in-house and create a quota arrangement with 5 minimum split quantity. In your quota arrangement, you can set 100% of the quantity to the external supplier.

Regards,

Catano

[rafael_zaragatzky]

Thank you, Catano.

This setting has definitely had impact, but somewhat strange and not the desired one. 🙂

I couldn't delete the own production item completely in the QA because it has already allocated qty. But I put its quota to zero. Then I assigned the minimum split qty and changed the proc. type to E. The QA usage in the MM is still 4 (also effective in MRP).

The effect is strange: the system creates PReq's no matter the requested quantity - I don't manage to make it create planned orders! 🙂 Maybe because the material master says "consider QA" and there's only external procurement item available there?

If I leave the quota on the own production item in the QA (yet keeping the minimum split qty), then the system creates planned orders always, no matter the required qty, ignoring the "minimum split qty" setting.

BR

Raf

[Caetano]

Did you try to change the procurement type on your product to X?

[rafael_zaragatzky]

Hi Catano,

I have now tested the same combinations as before but with proc. type X. It is exactly the same functionality as with E:

- If the own prod. is deactivated in the QA (quota zero), the system creates PReq's no matter the requested quantity.

- If the own prod. is activated, the system creates planned orders no matter the requested quantity.

It seems like MRP works like this: if the field QA usage says "QA is relevant for MRP", the proc. type in the MM is ignored and the system follows the allocation in QA. The field "minimum quantity split" in QA is only checked in case of "splitting quota", i.e. when the lot sizing key prescribes "splitting quota". We use the standard EX which doesn't have this flag and I wouldn't like setting it because we actually don't want to split - we want the entire quantity to go either to own production (if 5 pcs or fewer) or to purchasing.

BR

Raf