Article 11 - Source of Supply

Article 11 - Source of Supply


Article 11: How does SAP determine the source of supply for my purchase?

What is source determination?

Source determination is how SAP automatically suggests which supplier to use for your purchase. The system follows a specific hierarchy to find the best vendor option.

What is the source determination hierarchy?

Priority 1: Quota Arrangement

  • What it is: Predefined agreements that split purchases between multiple vendors
  • Example: 60% from Vendor A, 40% from Vendor B
  • When used: For strategic materials with multiple approved suppliers

Priority 2: Source List

  • What it is: List of approved vendors for specific materials
  • Contains: Valid date ranges and preferred vendors
  • Benefit: Ensures only approved suppliers are used

Priority 3: Contract/Scheduling Agreement

  • What it is: Long-term agreements with predefined terms
  • Advantage: Better pricing through volume commitments
  • Usage: For regular, high-volume purchases

Priority 4: Purchasing Info Record

  • What it is: Basic vendor-material relationship with pricing
  • Contains: Last purchase price, delivery terms, minimum order quantity
  • Fallback option: When no formal agreements exist

How does the system choose?

  1. Checks quota arrangement first - splits quantity if multiple vendors
  2. Looks for active source list - suggests approved vendors
  3. Finds valid contracts - uses best pricing agreements
  4. Falls back to info records - uses historical purchasing data

What if no source is found?
The system will prompt you to either:

  • Create a new purchasing info record
  • Request quotations from potential suppliers
  • Manually select a vendor



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