Lesson 5 of 6
How SAP determines the source of supply
8 min
Source determination is the logic SAP uses to propose or assign a supplier when a requirement appears. When it works, MRP requisitions arrive with the right source and convert to POs or schedule lines without anyone touching them. When it does not, buyers spend their days assigning sources by hand. Knowing the sequence is the key to designing and testing it.
The sequence in the MRP run
During the planning run, SAP checks sources in this order and stops at the first that gives a result:
- Quota arrangement, if one is valid and its usage allows MRP. It picks the source with the lowest quota rating. Because a quota names suppliers, the agreement item comes from the source list.
- Source list entries with MRP indicator 1 or 2. If several entries have an MRP indicator, the first one is taken.
- Scheduling agreements: a valid one is chosen; with several, one with active releases is preferred, otherwise the lowest document number.
- Contracts: plant-specific before cross-plant; with several at the same level, the lowest document number.
- Info records with the automatic sourcing indicator: plant-specific before purchasing-organization level, then lowest supplier number, purchasing organization and purchasing group.
If none of these yields a source, MRP creates the requisition without a source, and a buyer must assign one.
- Valid quota arrangement with MRP usage?Yes → source with lowest quota rating · No → next
- Source list entry with MRP indicator 1 or 2?Yes → first such entry · No → next
- Valid scheduling agreement?Yes → one with active releases, else lowest number · No → next
- Valid contract?Yes → plant-specific first, then lowest number · No → next
- Info record flagged for automatic sourcing?Yes → plant-specific first, then tie-breakers · No → requisition without source
Outside MRP: manual requisitions and POs
When a buyer or requester creates a requisition and asks SAP to find a source, the sequence is similar: quota arrangement (lowest rating valid on the delivery date), then the source list (a single valid entry is assigned; with several, the fixed one; if an agreement item and an info record are both fixed, the agreement wins), then outline agreement items, then info records. If more than one source is equally valid at the agreement or info record stage, SAP does not pick one automatically; it offers the list and the user chooses. Ambiguity is the most common reason automatic PO creation stops.
Simplified sourcing in SAP S/4HANA
SAP S/4HANA reworked source determination (often called simplified sourcing). In this approach the source list is no longer a prerequisite for MRP to find agreements and flagged info records, and SAP has published notes describing the changes. The order above remains a good mental model, but exact behavior depends on release and settings, so prove it in your system with tests rather than relying on ECC experience. Contoso keeps source lists for production components anyway, because the source list requirement is a control it wants.
| Requirement | Data found | Expected source | Why |
|---|---|---|---|
| MRP, rotors, plant 1710 | Quota 70/30; source list with MRP indicators | Lakeside SA or Harbor contract by quota rating | Quota has top priority |
| Manual requisition, rotors | Same data; quota usage includes requisitions | Source with lowest rating on the delivery date | Quota valid outside MRP too |
| Office supplies, material group | Northpoint value contract only | Northpoint contract item | Single valid agreement |
| New bracket, two flagged info records, no list | Two equal candidates | None assigned; buyer chooses | Ambiguous sources |
What would you do?
After go-live, MRP creates rotor requisitions with no source, although the Harbor contract and Lakeside scheduling agreement are valid. The source list exists. What is the most likely cause to check first?
- MRP order: quota arrangement → source list with MRP indicator → scheduling agreement → contract → flagged info record.
- Tie-breakers: plant-specific first, then lowest document or supplier number.
- With several equally valid sources and none marked, SAP does not assign automatically.
- Simplified sourcing changed some rules; prove behavior in your release with tests.
Check your understanding · not graded
Lesson check
1. Which source has the highest priority in MRP source determination?
2. Two valid contracts exist, one plant-specific and one cross-plant. Which does MRP prefer?
3. When does SAP not assign a source automatically?
4. What happens if MRP finds no source?