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SAP S/4HANA introduced several simplifications in Production Planning, especially for Material Requirements Planning (MRP), as I explained in my blog MRP: Simplifications in S/4HANA. One of these simplifications is known as Simplified Sourcing, and it changes the logic used by MRP to determine the source of supply for a replenishment proposal with external procurement.
Some of the changes introduced by Simplified Sourcing in the MRP source determination were:
- Source List is no longer mandatory for source determination.
- Checking the new flag in “Auto Sourcing” in the info record is enough to make a source of supply relevant for MRP.
- Contracts and Scheduling Agreements are automatically selected by MRP as a source of supply, if they exist.
SAP note 2268069 explains the simplified sourcing logic in detail, and it suggests that it is simpler than classic MRP because of the following reasons:
- The different sources of supply are pretty symmetrical. Sources of supply have a temporal validity, a quantitative validity, a deletion indicator, and a "relevant for automatic sourcing" indicator. The sourcing logic can treat the different sources of supply in a uniform way
- Quota arrangements can be used to prioritize any of the possible sources of supply
- Purchasing info records are proper sources of supply. The SAP S/4HANA MRP can select purchasing info records without source list entries. It is sufficient to define the supplier information of a material in the purchasing info record.
- Production versions make sure BOM and routing fit together
- Production versions have always been the only in-house production source of supply integrated with APO PP/DS. With production versions as the only in-house production source of supply, ERP sourcing and PP/DS sourcing become more similar.
- Purchasing info records, contracts, and delivery schedules have always been the external procurement sources of supply integrated with APO. With purchasing info records being proper sources of supply, ERP sourcing and PP/DS sourcing become more similar
- A unified source of supply model is the basis for future innovations in sourcing
While simplified sourcing indeed streamlines the master data required for source determination, it brings one additional challenge to companies that are migrating from SAP ECC to SAP S/4HANA, as they will need to review the existing master data, in order to make sure that source determination works in SAP S/4HANA.
In order to minimize the migration efforts, SAP implemented a new setting that allows simplified sourcing to be deactivated for external procurement. This new logic can be introduced into all the supported SAP S/4HANA releases with the following notes:
3552667 - Feature: Disable/Enable simplified sourcing in S/4HANA for plants - Dynpro changes
3493681 - Feature: Disable/Enable simplified sourcing in S/4HANA for plants.
SAP Note 3493681 introduces the new flag 'SKIP_SIMPLIFIED_SOURCING' in table T399D, and when this flag is checked, then only the source list is considered by both MRP and MRP Live as a valid source of supply.
SAP Note 3552667 implements the screen changes and it brings the field 'Skip Simplified Sourcing' into customizing. This flag can be accessed either through customizing transaction OMDT (external procurement customizing) or OPPQ (plant parameters customizing). Figure 1 shows the setting checked in view Default Values for Purchasing/MRP.
Figure 1: Skip Simplified Sourcing
Now let’s see some examples of how exactly this flag works in MRP and observe the MRP behavior with different combination of settings.
Example 1:
- Flag Skip Simplified Sourcing Unchecked
- Auto Sourcing Checked in the Info Record
- No Source List
In this example we will just simulate the standard Simplified Sourcing logic, because the new flag Skip Simplified Sourcing is unchecked. Figure 2 shows that the flag Auto Sourcing is checked in the Info Record of supplier VENDOR_001 for material S4HANA_ROH_005.
Figure 2: Auto Sourcing checked in the Info Record
After running MRP, we can see in transaction that this supplier has been selected as a valid source of supply for a purchase requisition created by MRP, because the Simplified Sourcing logic was used by MRP.
Figure 3: Source of Supply determined by MRP
Now let’s go to the next example, where we will deactivate Simplified Sourcing and run MRP again, with the same master data.
Example 1:
- Flag Skip Simplified Sourcing Checked
- Auto Sourcing Checked in the Info Record
- No Source List
In the new example we kept the same master data previously used, but we have checked the flag Skip Simplified Sourcing in the MRP customizing.
Figure 4: Skip Simplified Sourcing Checked in customizing
When we run MRP for the same material and with an identical planning situation, we can observe that MRP could not determine a vendor for the purchase requisition. That happened because we don’t have a source list for our material, and with the Simplified Sourcing logic deactivated, the Source List becomes mandatory for the MRP Source Determination.
Note that the system behavior will be the same if we run Classic MRP or MRP Live.
Figure 5: Source of Supply was not determined by MRP, because there is no Source List
Now let’s see another example, where we will keep Simplified Sourcing deactivated and we will create a Source List.
Example 3:
- Flag Skip Simplified Sourcing Checked
- Auto Sourcing Checked in the Info Record for VENDOR_001
- Source List created where VENDOR_002 is relevant to MRP.
In this third example we will keep the Skip Simplified Sourcing flag checked, and we will create a Source List, but the supplier relevant to MRP will be VENDOR_002, for which the Auto Sourcing flag is unchecked in the Info Record.
Figure 6: Source List with a valid Source of Supply
After we run MRP for our material, we can observe in MD04 that VENDOR_002 has been selected as the purchase requisition source of supply, as it is relevant for MRP in the source list.
Figure 7: Source of Supply determined by MRP
In the examples above we have demonstrated the source determination logic using only Info Records and Source Lists, but the results would be similar when using a Contract or Scheduling agreement:
- If the Skip Simplified Sourcing is checked, Contracts and Scheduling Agreements will be automatically selected as a source of supply.
- If the Skip Simplified Sourcing is unchecked, Contracts and Scheduling Agreements will only be selected as a source of supply if there is a source list entry determining that they should be selected by MRP.
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