SAP MM Interview Questions

What is SAP MM?

SAP MM is known as SAP Material Management system. SAP MM role in business process is as follows:

A business process in SAP is termed as “Module”.

SAP Materials Management (MM) is a part of Logistics area and helps to manage the procurement activity of an organization from procurement.

It supports all aspects of material management (planning, control etc).

It is the backbone of the Logistics area which incorporates modules like Sales and Distribution, Production Planning, Plant Maintenance, Project Systems, Warehouse Management which are extremely obsessed on Materials Management module.

Or

SAP MM (Material Management) is a functional module in SAP that deals with procurement handling and material management. The MM module contains master data, system configuration and transactions to complete the procure to pay process.

What are The Features of SAP MM?

The features of SAP MM system are as follows:

  • SAP MM is one of the modules of SAP that deals with material management and inventory management.
  • Material Management process ensures that there is never a shortage of materials or any gaps in the supply chain process of the organization. SAP MM speeds up the procurement and material management activities making the business run smoother with complete time and cost efficiency.
  • It deals with managing the materials (products and or services) resources of an organization with the aim of accelerating productivity, reducing costs and increase improvement and at a similar time be versatile to accommodate changes in day to day life.
  • It deals with the Procurement Process, Master Data (Material & Vendor Master), Account Determination & Valuation of Material, Inventory Management, Invoice Verification, Material Requirement Planning etc.

What are the essential components in SAP MM?

  • Determine requirements
  • Source determination
  • Vendor Selection
  • Order Processing
  • Order follow up
  • Goods receipts and Inventory management
  • Invoice Verification

What is the use of SAP Material Management module?

SAP Materials Management (MM) is a part of Logistics area and helps to manage the procurement activity of an organization from procurement.

It supports all aspects of material management (planning, control etc).

It is the backbone of the Logistics area which incorporates modules like Sales and Distribution, Production Planning, Plant Maintenance, Project Systems, Warehouse Management which are extremely obsessed on Materials Management module.

Mention what are the types of special stock available?

The types of special stock available are subcontracting, consignment, project, pipeline, sales order, stock transfer, returnable packaging with customer, etc.

What do you understand from Procurement process in SAP MM?

Every organization acquires material or services to complete its business needs. The process of buying materials and obtaining services from vendors or dealers is procurement.

List out important field in purchasing view?

The critical fields in purchasing view are:

  • Base unit of measure
  • Order unit
  • Purchasing group
  • Material group
  • Valid from
  • Tax indicator for material
  • Manufacturer part number
  • Manufacturer … so on…

Explain steps in Procurement Lifecycle?

  • Requirement and Information Gathering

Procurement process starts with gathering information about product and its quantity. Then for required products and services, it is necessary to look for suppliers who can satisfy the requirements.

  • Supplier Contact

After gathering requirements one will look for the suppliers who can fulfill the requirements. Based on that quotation request or information request can be made to suppliers or direct contact can be made with them.

  • Background Review

Once the supplier is known product/service quality is checked, and any necessities for services such as installation, warranty and its maintenance are investigated. Some samples of the products can be obtained for quality examination.

  • Negotiation

Some negotiations with suppliers is made regarding price, availability and delivery schedule of the products/services. After this a contract is signed that is a binding legal document between supplier and ordering party. A contract will include all necessary information like price and quantity of material, delivery date, etc.

  • Order fulfillment

Ordered material will be shipped, delivered to the ordering party and supplier is paid accordingly. Training and Installation of product or services may also be included.

  • Consumption, Maintenance and Disposal

As the products/service is consumed the performance of the products or services is evaluated and any follow up service support if required is analyzed.

Explain the importance of the batch record?

A batch tells about a quantity of a particular product, which is processed or produced at the same time with the same parameters. The materials produced in such batch have the same values and characteristics. While the batch record gives the information about a particular batch product and helpful in knowing whether the product has gone through GMP (Good Manufacturing Process).

Explain how you can link a document to a vendor master record?

To link the document with the vendor master record by using the XK01 transaction code or by using the following menu path

SAP Menu > Logistics > Material Management > Purchasing > Master Data > Vendor > Central > XK01- Create.

Mention what are the major purchasing tables? List the transaction codes for them?

Purchase requisition > EKBN

Purchase requisition account assignment > EBKN

Release documentation > EKAB

History of purchase documents > EKBE

Mention what are the data contained in the information record?

The information record contains data related to the units of measurement, such as the products, vendor price, materials used by specific vendors, etc. It also contains information on the tolerance limit of the under delivery of data, vendor evaluation data, planned delivery time, availability status for goods.

Mention what is the transaction code to delete a batch?

The transaction code MSC2N is used to delete a batch. By flagging the batch master record, you can delete a batch record alternatively.

Mention what is the transaction code used to extend the material view?

To extend the material view transaction, code MM50 is used.

What is External Procurement?

External procurement − It is the process of procuring goods or services from external vendors. There are 3 basic forms of external procurement generally supported by the Purchasing component of IT system.

One time orders are generally used for material and services that are ordered irregularly.

Longer-term contracts with the subsequent issue of release orders – For materials that are being ordered regularly and in large quantities, we can negotiate deal with the vendor (seller) for pricing or conditions & record then in a contract. In a contract you also specify the validity date.

Longer-term scheduling agreements and delivery schedules – If a material is ordered on an everyday basis and is to be delivered according to an exact time schedule, then you set up a scheduling agreement.

What is Internal Procurement?

Internal Procurement − Large corporate organizations may own multiple separate businesses or companies. Internal Procurement is process of getting material and services from among identical company. So, each of these companies maintains a complete bookkeeping system with separate Balance, Profit & Loss Statements so that when trade occurs between them it will be recorded.

What is Special Procurement?

Special Procurement

Special stocks are stocks that are managed differently as these stocks did not belong to company and these are being kept at some particular location.

What is Source List and what is the transaction code for creating Source List?

To identify sources of supply for materials a source list is used. To create a source list the transaction code used is ME01.

For creating a purchasing info record what are the pre-requisites?

The pre-requisites for creating a purchase info record are:

  • Material Number
  • MPN ( Manufacturer Part Number )
  • Vendor Number
  • Organizational level code

Explain the terms Planned delivery and GR processing time?

Planned delivery means number of calendar days required to obtain the material, and GR processing means number of workdays required after receiving the material for inspection and placement into storage.

What is purchase requisition as related to SAP? Mention the document types that are used in purchase requisition?

Purchase requisition in SAP determines both stock and non-stock items to the purchasing department. It can be done either manually or automatically, the document types used in purchase requisition are:

  • RFO ( Request For Quotation )
  • Outline Agreement
  • PO ( Purchasing Order )

Explain how consignment stocks are created?

In the normal purchase order or requisition, consignment stocks are created. While creating consignment stocks things to be considered is that you must enter K category for the consignment item. As a result, the goods issued are posted to consignment stores and invoice receipt is not generated.

Explain how is the vendor return processed without a purchase order reference?

First you have to observe the return column and then select — Item Detail > MIGO_GR > Goods Receipt for Purchase Order. Use movement type 161 if the intention is to deduct the stock otherwise, 162 is used to undo the changes. In the end, you have to ensure that the document is a return purchase order, and then the document is saved.

You can also use transaction code M21N for this purpose

Explain how you can create a vendor account group in SAP?

To create vendor account group in SAP

Select display IMG > Financial Accounting > Accounts Payable/Receivable >Vendor Accounts > Master Records > Preparation of creating vendor master records > Define Accounts groups with Screen Layout

Explain what are the accounts created in SAP MM?

Assignment of account is necessary for the purchase order item, it is important in SAP MM as it determines following things

Account assignment type

Account that will be charged when you post the invoice or goods receipt

Account assignment data that you should provide

Explain what MRP (Material Requirement Planning) list is and what is the transaction code to access MRP list?

MRP list is the initial working document from which the MRP controller starts working, and it consists of planning results information for the material. For an individual item, you can access the MRP list by using the transaction code MD05. You can also access the MRP list by navigation path

SAP Menu > Logistics > Materials Management > MRP > Evaluations > MRP List- Material

Explain what is CBP? What is the difference between CBP and MRP?

CBP is the past consumption values of stock; it is used to forecast future requirements. On the basis of past consumption values, the net requirement of goods is calculated.

The difference between CBP and MRP is that when you plan materials using MRP, you have to predict the materials requirement based on sales and operations planning (SOP). While in CBP you have to predict the material requirement based on historical demand for materials.

What are the common assignment types in SAP MM system?

  • Plant to Company code
  • Purchasing organization to company code
  • Purchasing organization to Plant
  • Standard purchasing organization to plant

What are the different Info record types?

  • Standard
  • Consignment
  • Subcontracting
  • Pipeline

How do you flag a material for deletion?

A deletion flag can be set at client level, plant level or storage location level. Transaction MM06 is used to mark a material for deletion.

What is the use of Purchase Info Record?

Purchasing info record stores information on material and vendor supplying that material. For Example: Vendors current price of a particular material is stored in info record.

Where do you maintain Purchase Info Records in SAP MM?

Purchase info record can be maintained at plant level or at purchasing organization level.

What is Purchase Order?

Purchase order is the formal and final confirmation of the requirements which is sent to vendor to supply material or services. Purchase order will include important information like name of material with its corresponding plant, details of purchasing organization with its company code, name of vendor, and date for delivery of material.

What do you understand by Goods Receipt in SAP system?

After processing of purchase order by vendor, material is delivered to ordering party and this process is called as goods receipt. So, goods receipt is the phase in which the material is received by the ordering party and the condition and quality are verified. Once material is verified against quality then goods receipt is posted.

What is MRP run in SAP system?

MRP run or planning run is an engine which is used to fill demand and supply gap. Issues & Receipts are called MRP Elements. Issues include PIRs, Dependent Requirements, Order Reservations, Sales Orders, Issuing Stock Transfer Orders, etc. and receipts include Production Orders, Purchase Requisitions, Purchase Orders, Open Production Orders, Receiving Stock Transfer Order, Schedule lines, etc.

How do you check Stock Requirement List in SAP system?

This is used to see current stock and planned receipts. Use T-code: MD04

Enter Material and Plant to see list.

What is the use of MRP list?

MRP List is used to generate static report that contains planning run material wise and it displays time of MRP run at the top.

Use T-Code: MD05

What is the Production Order?

A Production order is used to define the material to be produced, plant location where production has to be done, date and time of production, quantity of goods required. A Production Order also defines which components and sequence of operations are to be used and how the order costs are to be settled.

How do you check the available stock at any point of time?

You can use Stock overview to check the available stock at any point of time. Stock overview can be checked using T-Code: MMBE

What is a Contract?

Contract is a long term outline agreement between vendor and ordering party over predefined material or services over certain framework of time. There are two types of contract −

Quantity Contract −

In this type of contract overall value is specified in terms of total quantity of material to be supplied by vendor.

Value Contract −

In this type of contract overall value is specified in terms of total amount to be paid for that material to the vendor.

What is the movement type for Goods issue reversal?

Movement type is 262 in Goods issue reversal.

What is the use of Material Document List?

Material document list is used to generate any goods movement such as goods receipt, goods issue for a production order, etc.

Can you generate packing/picking lists for goods issue in SAP MM?

In SAP EWM you can generate packing list.

What is a Scheduling agreement?

Scheduling agreement is a long term outline agreement between vendor and ordering party over a predefined material or service which are procured on predetermined dates over a framework of time.

What is Quota Arrangement in SAP system?

A particular material can be procured from different vendors depending upon the requirement. So, total requirement of a material is distributed to different vendor’s i.e. quota is assigned to each source of supply. This is known as quota arrangement.

How do you check Quota Rating?

Quota rating = (Quota Allocated Quantity + Quota Base Quantity)/Quota

What is the use of Posting Period in SAP system?

SAP ERP systems were designed so that business can be conducted in an efficient way. Various documents like purchase order, request for quotation, goods receipt are essential documents in a business. These documents need security i.e. if any of documents is posted incorrectly then business can be affected at various concern levels. So, to secure these documents we have a concept of posting period. Posting period means it will allow you to post and make changes in the documents only in a specific time period.

How do you define Posting Period in a company?

Posting period for a company can be defined using five fields which are as follows −

  • Maintain Fiscal Year Variant
  • Assign Fiscal Year Variant to Company Code
  • Define Variants for Open Posting Periods
  • Assign Variant to Company Code
  • Open and Close Posting Periods

What is the last step in Procurement cycle?

Invoice verification marks the end of procurement after purchase order and goods receipt.

Invoice posting will update all related documents in financial and accounting.

Blocked invoice that vary from actual invoice can be processed through invoice verification.

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