MRP Vendor Selection

It is possible to let MRP propose the preferred (or fixed) vendor for your external procurement. This is especially useful in a scenario where a central purchasing department is dictating vendor selection, but where the actual procurement decisions (quantity and timing) is done elsewhere (e.g. production dept for procurement of raw materials). This post will give you the step-by-step:

1. Material Master Settings

Make sure your material is relevant for MRP planning (MM02). This post is focusing on the vendor selection and I assume you can take care of making the correct settings to include a material in an MRP run.

On the MRP3 tab select procurement type F for External Procurement. Also select the special procurement type for external procurement.

2.Purchasing Inforecord

Enter a Purchasing Inforecord (ME11) or Contract (ME31K) for the vendor and the material that you are setting up. The inforecord is generally used for storing the catalogue price of a material. The contract is more suited for storing a quantity-based or value-based commitment with a vendor.

In a procurement environment with a release strategy the contract is also suitable for allowing a department to procure a material from a vendor up to a pre-defined value or quantity. The thought behind this is that the central procurement department gives a one-time approval (= contract release) for procurement of material RAW from vendor DIFOT for EUR 2.500.000. The production department can make multiple call-offs, without going through a release procedure, until the ceiling of the contract is reached. This shortens the procurement lead-time by delegation while still centrally controlling the budget.

3. Source list

The source list (ME01) is used to send the message to MRP what the preferred source for a material is. If you entered an inforecord or contract, this wil be automatically picked up by the source list when you press the red-and-white button. It is possible that multiple sources are shown. Enter ‘1? for MRP relevant in the last field of your preferred source. You can also set the fixed vendor indicator. Whenever a end-user tries to use a different vendor when creating a purchase order (ME21N), the system will issue a warning or error.

Having maintained the material master, inforecord and source list correctly, MRP is now able to suggest the correct vendor. The vendor can be displayed in MD04/MD05by pressing the vendor button at the bottom of the screen. The vendor is also displayed when you press the magnifying glass for the purchase requisition MRP element. You can limit authorization for users so that they cannot change the vendor or price in the purchase requisition or purchase order. How to do this exactly I will post some time later.

 

Credits goes to Kowboy for this article

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