MM (Materials Management) Interview

Questions
SAP MM FAQ's
1) What are the integral components in SAP MM?
The Components of SAP MM are listed below:

 Purchasing
 Inventory management
 Invoice verification
 Physical inventory
 Valuation
 Materials requirements planning
 Materials master
 Service master
 Foreign trade/customs

2) Mention t-code to create Purchase Requisition

in MM?
Transaction code ME51N can be used to create Purchase Requisition in MM

3) What are the various types of Basic

Procurement?
Basic procurement is of 2 types as listed below:

 Procurement for Stock vs Consumption

 External vs Internal Procurement

4) List few of the Common Stock Transport Order

Movement Types?
By utilizing MT 301, one step transfers of materials can be posted. The other
different transport scenarios vary in the MTs by the good receipt and good
Issues. Common Goods Issues may utilize MTs 303, 351, 641, or 643 in the
STO. A STOs Good Receipt generally uses MT 101.
5) What Is the difference between a Purchase
requisition and a Purchase Order?
A Purchase Requisition is a type of document which notifies the need for
services or materials, whereas a Purchase Order is a document type which is
a more formal request for materials or services from a plant or an outside
vendor. Procurement types can also be defined at the line item and can be
either subcontracting, stock transfer, standard, consignment or an external
service.

6) List the difference between SAP MDM and SAP

MM?
MM  (Material Management) is a module which deals with the day to day
operations of inventory management (stuff related to material valuation,
storage, requirement planning etc ) and Procurement processes ( is related
to goods, receipt, Purchase orders BOMs etc).

MDM refers to Master Data management, It is business specific data, which

encompasses information regarding vendor/customer names, Product
descriptions, along with banking information.

7) What is Pricing procedure in MM?

In the MM module, the Pricing procedure is a channel for determining the
prices in purchasing documents. This give us functionality for assigning
different calculation types for various needs. During PO and RFQ creation In
MM module, the pricing procedure is utilized. The total value of material is
based on all the addition and subtraction such as surcharge, discount, tax,
freight, etc.

8) What are the steps needed to configure pricing

procedure in SAP MM?
 Maintaining Condition Table
 Maintaining Access Sequence
 Maintaining the Condition type
 Maintaining the Calculation Schema
 For the vendor, maintaining the Schema Group
 For Purchasing Organizations, maintaining the Schema Groups
 Assigning Schema Group to Purchasing Organization
 Maintaining Schema Determination
  Assigning Schema group to Vendor
 Maintaining condition record

9) What are the various steps involved in

Procurement Cycle of SAP MM?
 Determining the requirements of material
 Determining the source
 Selecting the vendor and Comparing the Quotations
 Purchase Order Processing
 Purchase Order Follow-Up
 Receiving Goods and managing Inventory
 Verifying the Invoice
 Payment to vendor

10) How can we post goods receipt?

In T-Code: MIGO navigate to post Goods Receipt using the path given below
−

Logistics -> Materials Management -> Inventory management -> Goods

movement -> Goods movement

11) How can a user link a document to a vendor

master record?
By using the XK01 transaction code the user can successfully link the
document with the vendor master record or by utilizing the following menu
path:

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

12) What do you mean by Special stocks?

Special stocks are all those stocks which are managed separately as they
don’t belong to your company or these are stored at a specific location.

13) What are the various Special Procurement

Types in SAP?
Lister below the following special procurement types available in the SAP
System:

 Consignment
 Subcontracting
 Stock transfer using stock transport order
 Third-Party Processing
 Returnable transport packaging
 Pipeline Handling

14) What is Consignment Stock?

SAP Consignment is defined as a process in which the user purchases the
goods from a vendor, however, doesn’t valuate that stock. The user must
make the payments to the vendor, only when goods are withdrawn from his
store. Best example would be the Car shop which purchases the goods from
its vendors for advertisement and display purposes and only once cars are
sold, the vendor charges him.

The entire process of Consignment in SAP MM is managed by an item

category in purchasing document and there are certain prerequisites/steps
meant for the consignment process to work.

15) How would the user change unit of measures

in mmr?
Please follow the steps below:

 Go to mm02 t.code
 Enter your mat number
 Now select the over screen and then select basic data 1,
 Now you will find basic unit of measure which you can modify.

16) How can G/L Accounts for MM Account

Determination be verified?
The program RM07C030 verifies all the G/L account definition in your
Material Master valuation class. User can Search it via Company code and
Valuation area.

17) In Materials Management (MM), what is Data

Archiving?
Data archiving removes mass data which is no longer required by the
system (but that still should be available for reporting) from the database.
The SAP data archiving concept is typically based on the archiving objects of
the Archive Development Kit (ADK).

18) Define Stock Population?

The stock population is known as the total of all stock management units
which are encompassed in an inventory sampling. All these stock
management units are exclusively defined through the allocation of the stock
management levels to a given inventory sampling. As a result of this, the
stock population is also defined when the user allocates the level of the stock
management.

19) How to make a Dummy Reservation?

The user can try to create a new movement type with reference to 201
movement type.

20) How can the user include new custom field in

Services tab for a Service PO item?
The user can modify the description in the In the user field by customizing
(SPRO) and appended a search help to it.

21) How to modify the Valuation Class in SAP

MM?
User has to Go to t-code MMAM - This t-code is meant for altering the
material type and not the valuation class.

If the user modifies the material type in MMAM transaction, then

automatically the valuation class will be altered in the material master. The
system will accept the changed material type valuation class which was
initially created for that material type.

22) Is it possible to verify all the archive postings

of a certain material?
Please try with MBAL - Archived Material Documents.
First, select the option Database table and then in the 'Tables and Archiving
Objects' you are required to choose the second option 'Tables from which
data is archived'

23) Can we send a multilevel BOM to a

Subcontractor in purchase order?
There is no feature available in the subcontracting to have multilevel BOM,
we have two options

 First, is to attach the BOM as Document in the PO for the appropriate

component
 The second option is to add the relevant component in same order
with delivery to same vendor as a subcontractor with BOM.

24) What is subcontracting process?

Subcontracting is defined as one of the procurement processes available in
MM. In this process, the components are shared with the vendor for getting
the final product. The material which must be produced by the vendor can
be ordered as a subcontract item in a purchase requisition, purchase order,
or scheduling agreement. Each of the subcontract item has one or more sub-
items which contains the individual components the vendor is required to
perform the subcontract work or value-added service.

25) How will the user consider Subcontracting PO

components which are not sent by my company to
vendor however they are added by the
vendor(subcontractor)?
We recommend you to get an updated invoice in which the cost of Nut Bolt
and Gasket etc.  are all added. Thereby, you can either alter the PO price as
per that price or make the invoice accordingly. By doing this the system will
automatically update the Material/Product cost accordingly.

26) How to create movement type?

Assume we are creating movement type 281 Goods issue for a network

Please follow the steps below:

  First, navigate to Transaction OMJJ
 Now the standard movement type 201
 Then click on copy and overwrite the 201 with 281
 Now click the Enter button, then click on Copy all
 Please select the new movement type 281
 Now On the left-hand column screen, click on Reversal/follow-on
movement
 At last fill in the reversal movement type

27) What is RTP?

RTP (Returnable Transport Packaging) is referred to a multi-trip packaging
medium (for instance, containers or pallets) through which the goods can be
transported multiple times between customers and vendors. Returnable
transport packaging from a vendor which is stored at a place on your
premises is treated as a special stock and is clearly assigned as a belonging
to the vendor. RTP is vendor's property, therefore, it is excluded from the
customer’s valuated stock.

28) How can the user post returnable Transport

Packaging (RTP) Quantities at Goods Receipt for
Purchase Order?
A quantity of returnable transport packaging can be entered at goods receipt
for a purchase order, as listed below:

 In Inventory Management menu, navigate to Select -> Goods

movement -> Goods receipt  -> For purchase order  -> PO number
known  -> or  path PO number unknown.
 On the initial screen please enters the movement type (101) and also
the order number (or the selection criteria for the purchase order).
 Now please select and copy the required items.
 Now in the overview screen, choose Edit -> W/o purchase order ->
Enter.
 A popup window will appear, Please enter the movement type and the
special stock indicator (e.g. 501 M ) for the quantity of returnable
transport packaging.
 Now please enters the returnable transport packaging items.
 At last, post the goods movement.

29) How can you transfer Posting of RTP stock

between Storage Locations?
A transfer posting of RTP stock between two storage locations is
entered as listed below:

 In Inventory Management menu, navigate to Goods movement ->

Transfer posting -.  
 Now enter data to the initial screen:
 Now nvigate to Movement type Transfer posting  -> RTP stock  ->
SLoc to SLoc  -> ( -> 311 M ->).  
 Now give the plant and the issuing storage location.
 Give vendor and the receiving storage location on the next screen.
 Please enter all the items.
 At last, post the goods movement.

30) What is the difference between the stock

transfer between two plants belonging to same
company code and those belonging to different
company code?
Stock Transfer Order (STO) for Intra Company

 The stock transfer between two plants are done with one Company
code
 Purchase Order Type 'UB' is used in this case
 Delivery Type 'NL' is used
 Goods Movement type is 641 for Intra Company
 Item Category in delivery is NLN

Stock Transfer Purchase Order (STPO) for Intra Company

 Two Different Company Codes are required for Stock Transfer

Purchase Orders between two plants
 Purchase Order Type 'NB' is used in this case
 Delivery Type 'NLCC' is used
 Goods Movement type is 643 for Inter-Company
 Item Category in delivery is NLC
1. What is the difference between a Purchase Requisition and a Purchase Order?
A PR is an internal document that sends  notification to purchase department when
some material is service is required. PR can be generated by department that needs any
material or service.

A PO is a document sent to vendor by purchaser which is an official request of mentioned

material or services. POs are generally binding on purchaser, though it depends on terms
and conditions mentioned in PO.

2. What MRP procedures are available in MM-CBP (Consumption Based Planning)?

Various material planning methods are used in MRP (Material Requirements Planning).
Reorder point procedure (VM) Forecast-based planning (VV) Time-Phased materials
planning (PD) These are specified in material creation (MM01) under the MRP 1 tab.

3. Can you change a Purchase Requisition after it has been created?

Yes. Use Transaction ME52N. Check to see if the PR has already had a PO issued against
it. If so, you must inform the Purchasing Group. Check if the PR has been approved. If so,
you may only make changes to a limited extent and may be subject of approval. Check if
the PR was created by MRP. In this case, you don’t have much control over the
modification process. All changes to items are logged and stored. Information stored
includes when the information was changed, who changed it, what the changes were, etc.

4. How do we create Consignment Stocks?

Everything is the same as a normal PR or PO, except: Enter the item category “K” for the
consignment item. This ensures that the Goods Receipt is posted to the consignment stores
and an invoice receipt cannot be generated for the item. Also, do not enter a net price.

5. What is Vendor Evaluation and how do you maintain it?

Vendor Evaluation helps you select the Source of Supply by a score assigned to a particular
vendor. The scores are on a scale of 1 to 100 and are based on differing criteria. Use
Transaction ME61 and enter the Purchasing Organization and Vendor Number.

6. What are the components of the Master Data that details a company’s procurement; used by,
Vendor Evaluation for example?
The key components of Master Data are: Info Record (ME11), Source List (ME01), Quota
Arrangement (MEQ1), Vendor (MK01), Vendor Evaluation (ME61), and Condition Type
(MEKA).

7. How do we get a proper list of vendors to send an RFQ?

Either use the Information Record to see who has sold a particular material to the
organization in the past, or go through the Source List.

8. How do you create a Source List?

Use Transaction ME01. Enter the Material Number and the Plant Data. Enter source list
records, validity period, period of time material is procurable, Vendor Number, responsible
Purchasing Organization (or number of the Agreement or Contract), PPL (if the material can
be procured from another plant), Fixed Source (?), MRP control. Also, a check should be
done to see whether any source list records overlap.

9. What are different Info Records types?

Different Info Record types are Standard, Consignment, Sub-Contracting and Pipeline.

10. Under what conditions are “planned orders” created? What may planned orders be converted
to and how is that conversion accomplished?
Planned orders are always created when the system creates an internal procurement
proposal. In the case of vendor procurement, the MRP Controller may create a planned
order or directly create a PR. The next step for a planned order is to be converted to a PR
so it goes to purchasing and is to eventually become a PO. A planned order can be
converted to a PR using transaction code MD14.

11. What is a consignment Stock?

The stock supplied by the vendor is in the purchasing company’s premises but the company
has no liability for the same. The liability for the company will only arise one the goods are
issued from the consignment stock for use. However, in this case, even before the use,
purchasing company can check in system how much stock is lying in inventory.

12. What is Sub-Contracting cycle in MM?

In Sub-contracting, we send raw material or input material to sub-contractor and then
receive the finished goods. A sub-contracting PO is created with item category ‘L’. Input
material is sent to vendor for processing with movement type 541. When GR is done using
movement type 101, movement type 543 takes place automatically and takes care of
consumed material.

13. What is meant by Scales in MM?

When we maintain price in Info Records, we can make use of scales. It is used when price
of a material is dependent on quantity purchased. For eg. For 500 pieces of material ABC,
price is Rs. 10, however, if the order quantity is more than 500, price is Rs. 9. Scales are
maintained in various master data like info record, quota arrangement etc. from where
scales can be pulled in a Purchase Order.

14. How to Flag a material for deletion?

A material must be flagged for deletion before deleting it using Archive and Delete program.
A deletion flag can be set at client level, plant level or storage location level. Whatever level
you flag a material for deletion, it is flagged for deletion at all corresponding lower levels.
Transaction MM06 is used to flag a material for deletion.

15. Can a material be used after flagging it for deletion?

Yes, even after flagging a material for deletion, it can be used till it is actually deleted. It will
just trigger a warning message whenever the material is used. If you want a material to be
blocked for any use with immediate effect, you should use a material status which is there in
Basic View 1 for general level or in MRP 1 view for plant level blocking.

16. What is the function of OBYC?

OBYC is t-code used for configuring Automatic Account Posting.

Postings are made to G/L accounts automatically in the case of Inventory Management and
Invoice Verification relevant to Financial and Cost Accounting.

17. What is valuation grouping code related to OBYC?

Valuation grouping code is used to group the valuation area, In SAP, we can have valuation
level at Company code level or at plant level.

General practice is to use the valuation area at plant level, because valuation may differ
from one plant to another. The valuation grouping code makes it easier to set automatic
account determination. If we need to define common account determination for several
valuation areas, we can assign same valuation grouping code to all those valuation areas.
We can maintain the valuation group code in OMWD for various valuation areas.

18. What types of special stocks are available?

pecial stock types available in SAP are Consignment, Subcontracting, pipeline, project,
sales order stock, Returnable transport packaging, stock transfer, and the third party.

19. What is the difference between Contracts and Scheduling Agreements?

A contract is a pre-determined long term agreement to supply material or service for a
certain period of time. Specific delivery dates are not mentioned in the contracts. Contracts
can be of two types: Value Contract or Quantity contract

In Scheduling agreements, we can enter scheduling lines which gives details of quantity
that should be delivered on specific date. Plant must be entered in SA so that materials can
be delivered at plant. These are generally used for materials whose requirements are
predictable.

20. How can we create new transaction codes in SAP?

New transaction codes can be created using t-code SE93.
 21. What are release procedures with and without classification?
Release Strategy with Classification:
 PR can be released at header level as well as item level.

 It can be used for both internal/external documents.

 Can be set on any field available in structure CEBAN

Release Strategy without Classification:
 PR can be released only at item level.

 It can be used only for internal documents such as PR.

 This strategy can be used only on 4 parameters which are Account assignment category, Plant,
Material Group and value of PR.
 

22. What is meant by batches?

A batch is a subset of the total stock of a material. It represents a homogeneous unit which
has unique specification. Normally, a batch is assigned to the quantity of material produced
during a given production run. A batch number uniqueness can be assigned at any of the
following 3 levels:

At client level: The same batch number can be assigned only once within the entire client.

At material and plant combination level: Same batch number can be assigned to material
with different specification in each plant.

At material number level: A batch assigned to a material has the same specification for all
plants where material is extended. Batch number can be reassigned with a different
specification for each material.

23. How to handle free items in PO?

While creating PO, we can tick the item as free item in item overview section of PO. The
price will be zero for free marked item.

24. What information is maintained in Accounting View of material master?

Accounting view is a plant specific view. Besides other information, it contains important
information such as valuation class and price control. Valuation class helps in determining
the relevant GL account used for account posting. It is also used while configuring OBYC
settings. Price control indicator determines if material is maintained at Standard price(S) or
Moving average price (V).

25. What is the use of Material types?

‘Material Types’ is used to group various materials based on some common properties. It
helps in maintain material master data for a particular material. Using material types, we
can control which all views are required for a material type, which fields are required or
optional, the material number range etc.

26. If you have a multi-lineitem PO, can you release the PO item by item?
No, a PO is released at the header level meaning a total release or “With Classification”.
PRs, on the other hand, have two release procedures possible. “With Classification” as
described above, and “Without Classification” where it is only possible to release the PR
item by item

27. What is a Material Type?

A Material Type describes the characteristics of a material that are important in regards to
Accounting and Inventory Management. A material is assigned a type when you create the
material master record. “Raw Materials”, “Finished Products”, and “Semi-Finished Products”
are examples. In the standard MM module, the Material Type of ROH denotes an externally
procured material, and FERT indicates that the relevant material is produced in-house.

28. What is a price comparison?

Perform a price comparison using ME49 and one may compare quotations from different
vendors.

29. What is a Source List?

The Source List identifies preferred sources of supply for certain materials. If it’s been
maintained, it will ID both the source of supply and the time period. The Source List
facilitates gaining a fixed source of supply, blocked source of supply, and/or helps us to
select the proffered source during the source determination process.

30. What are the various “steps” in the MM Cycle from material creation through invoice?
The following creates a rough picture of the MM Cycle. Create material, create vendor,
assign material to vendor, procure raw material through PR, locate vendor for certain
material, processing GR, goods issue, and invoice verification.

31. Give some examples of the information relating to a material’s storage/warehousing?

Some examples are Unit of Issue, Storage Conditions, Packaging Dimensions, Gross
Weight, Volume, and Hazardous Materials Number. Also, there are various Storage
Strategies information and options.
 

32. What are the various features of Consignment Stocks?

Consignment Stocks remain the legal property of the Vendor until the organization
withdraws the material from the consignment stores. The invoice can be due at set periods
of time, for example monthly, and it is also a configuration possibility that the organization
will take ownership of the stock after a certain period of time. Consignment Stock is
allocated to the available stock because the Consignment Stock is managed under the
same material number as your company’s stock. The most important characteristic of
Consignment Stock is that it isn’t valuated. When the material is withdrawn, it is valuated at
the price of the respective vendor. Before procuring the stock, consideration should be
given if one consignment is coming from multiple vendors. If so, we can manage all of them
independently at the price of the individual vendors.

33. What is a Quotation?

Once a vendor has received an RFQ, the vendor will send back a quote that will be legally
binding for a certain period of time. Specifically, a Quotation is an offer by a vendor to a
purchasing organization regarding the supply of material(s) or performance of service(s)
subject to specified conditions.

34. What is the Source List?

The Source List identifies preferred sources of supply for certain materials. If the Source
List has been properly maintained, it will identify both the source of a material and the
period of time in which you can order the material from the source.

35. What is an Invoice Verification?

The Invoice Verification component completes the material procurement process and allows
credit memos to be processed. Invoice Verification includes entering invoices and credit
memos that have been received, checking accuracy of invoices with respect to price and
arithmetic, and checking block invoices (these are the ones which differ too much from the
original PO).

36. What are the different types of Invoice Verification?

Invoices based on Purchase Orders. With purchase-order-based Invoice Verification, all of
the items of a purchase order can be settled together, regardless of whether or not an item
has been received in several partial deliveries. All of the deliveries are totaled and posted
as one item. Invoices based on Goods Receipts. With goods receipt-based Invoice
Verification, each individual goods receipt is invoiced separately. Invoices without an order
reference. When there is no reference to a PO, it is possible to post the transaction directly
to a Material Account, a G/L Account, or an Asset Account. You can park Invoices that
reference POs and GRs as well as Invoices with no reference in the system. When you park
a document or change a parked document, neither substitution nor validation is supported.

36. Why would an organization need to allow Negative Stocks?

Negative Stocks are necessary when Goods Issues are entered necessarily (business
process reasons) prior to the corresponding Goods Receipts and the material is already
located physically in the warehouse.

37. What is the use of ‘Partner Functions’ for a vendor?

Partner Function is used to define responsibilities and duties of other business partners.
Some partner functions are AZ(Alternate payee), CR(Carrier), OA(Ordering address),
GS(Goods supplier), PI(Invoice presented by) etc.

38. What is the use of ‘Material Status’?

Material Status helps in determining the usability of a material. It is a 2-digit code which can
be maintained as plant specific material status, cross-plant material status, and distribution
material status.

39. What is the ‘Price Control Indicator’?

Price Control Indicator’ is maintained in accounting view and is used to determine how a
material will be valuated. It can be Standard Price(S) or Moving Average Price(V). If the
indicator is set to S, all inventory postings are posted at standard price maintained in
material master. If there are variances in any transaction due to different price, the variance
is posted in price difference account.

If price control indicator is set at V, goods received will be done at GR price. The moving
average price will be adjusted in material master using weighted average formula. If goods
movements or invoice receipts are posted using a price that differs from the moving
average price, the differences are posted to the stock account.

40. What are various types of Stock transfer?

The physical movement of stock between different physical locations is called as ‘Stock
transfer’. Stock transfer can be either a single step process or a two-step process.

Various Stock transfers are:

Inter Company (Company to Company)

Inter Plant/Intra Company (Plant to Plant)

Intra Plant (Storage location to Storage location)

41. What are various Stock Types?

In SAP, commonly used stock types are:

Unrestricted Stock (Stock that is available for use)

Restricted Stock

Quality Inspection Stock (Not the unrestricted stock but can be considered for MRP)

Blocked Stock (Stock rejected by quality or production)

GR Blocked Stock (Conditionally accepted stock. Not the unrestricted stock)

42. What are various procedures for counting Physical Inventory?

Physical Inventory procedures in SAP MM are as follows:

Periodic Inventory (All stocks are counted on a pre-determined date)

Continuous Inventory (stocks are counted continuously during the entire fiscal year)

Cycle Counting (Counting is done at fixed intervals)

Inventory Sampling (Randomly selected material stocks are physically counted on the
balance sheet key date. If variances are small enough, it is presumed that the book
inventory balances for the other stocks are correct.)

43. What is the use of ‘Split Valuation’?

Within a valuation area, sometimes, we need to valuate various stocks of a material
separately. It can be because of different origin, quality, status, etc. We use split valuation in
such cases. In this case, material is managed at several partial stocks which are sub-stocks
of main material stock. Any transaction, relevant for valuation, is carried at this partial stock
level. In accounting view, we define if we need split valuation for any material.

44. What are the various stock valuation methods?

Stock revaluation can be done by following three methods:
LIFO(Last In First Out): Materials received last are consumed first. You can assume
example of elevator where people who enter last exit first!

FIFO(First In Firs Out): Materials received first are consumed first.

Lowest Value Method: Stocks are valued at their original price or the current market price
whichever is lower.

42. What are the organizational levels of the Enterprise Structure in R/3?
The top level of the organizational plan is the Client, followed by Company Code, which
represents a unit with its own accounting, balance, P&L, and possibly identity (subsidiary).
The next level down is Plant, an operational unit within a company (HQ, Assembly Plant,
Call Center, etc.). The Purchasing Organization is the legally responsibly group for external
transactions. This group is further subdivided into Purchasing Groups.

43. How do you set ‘Automatic Account Assignment’ in MM?

Once OBYC settings are properly done, system finds the correct G/L account using the
following data:

Chart of Accounts: Chart of Accounts is determined based on plant or company code used
in transaction

Valuation Grouping Code: It is determined based on the valuation area. Valuation Grouping
Code is maintained in t-code OMWD.

Transaction Key: eg. BSX, GBB etc. Transaction keys are determined automatically from
the transaction (invoice verification) or the movement type (inventory management).

Account grouping /Account Modifier (only for offsetting entries, consignment liabilities, and
price differences)

Valuation class of material or (in case of split valuation) the valuation type: The valuation
class allows you to define automatic account determination that is dependent on the
material. This can be achieved by assigning different valuation classes to the materials in
material master (Accounting view) and by assigning different G/L accounts to the posting
transaction for every valuation class.

 
45. What is ‘Transaction Keys’ while setting OBYC?
Since each movement type is assigned to a ‘value string’ which in turn is identified with a
transaction key, the goods movement determines the correct transaction key. Transaction
Keys’ are pre-defined in the system to enable transaction postings in Inventory
Management and Accounting (Invoice Verification).
Examples of pre-defined transaction keys are:

BSX (Inventory Postings)

WRX (GR/IR Clearing Postings)

PRD (Cost/Price differences)

UMB (Revenue/Expenses from revaluation)

GBB (Offsetting entries in Stock postings)

BSX, WRX, and PRD are relevant for a GR with reference to a purchase order for a
material with standard price control. The transaction key UMB is used when the standard
price has changed and the movement is posted to a previous period. GBB is used to
identify the GL account to post to as the offsetting entry to the stock account (when not
referencing a purchase order) such as miscellaneous goods receipts, goods issues for
sales orders with no account assignment, and scrapping etc.

46. What is a Business Area?

The business area is an organizational unit within financial accounting. It corresponds to a
defined business segment or area of responsibility, to which value movements recorded in
Financial Accounting can be assigned. It is usually derived automatically as it linked to other
organizational units. For eg. Business area for a combination of plant and division is
maintained by t-code OMJ7.

47. What is a Cost Center?

Cost Center accounting is used for controlling purposes. It is an organizational unit within a
controlling area which represents a defined location of cost incurrence. For example, any
department can be a cost center for recording all expenses incurred for that department.

48. What is a Profit Center?

Profit Center Accounting evaluates the profit or loss of individual, independent areas within
an organization. Profit center is an organizational unit in controlling to recognize your profit.
Profit center is attached to material master at plant level.

49. How to create Tax calculation procedure in MM?

Tax can be calculated for each line item of a PO separately based on the tax code. Earlier
TAXINJ, which is a formula based tax procedure, was used. Now, TAXINN, which is a
condition based tax procedure, is generally used. Tax procedure contains the condition type
and necessary specification for each condition type. Account keys are assigned to condition
types and these account keys determine the G/L to which the tax amount is to be
posted(OB40). These account keys are maintained using t-code OBCN. (All these
transactions are under Financial Accounting Global Settings Tax on Sales/Purchases Basic
Settings). Tax codes are assigned to country codes and country are linked with tax
procedure. Thus, based on tax code, corresponding tax procedure is determined and then
calculation is done based on condition types in that tax procedure.

50. How is scrap material taken care of in sub-contracting?

Scrap can be maintained in BOM as operational scrap, component scrap, By-Product or
Co-Product. Common practice is to maintain scrap as by-product and receive it back along
with processed material.

51. How are the by-products taken care of in sub-contracting?

When you create BOM using CS01, we can maintain main components with + ve quantities
and By Products / Scraps with – ve quantities.

When you make Goods Receipt for Subcontracting Purchase Order with 101 movement
type, components are automatically consumed with movement type 543 By Products /
Scrap are updated as stock provided to vendor movement type 545. Now we can receive
this scrap/ By product back in company’s inventory using movement type 542 (reversal of
541) with t-code MB1B.

52. What are the commonly used movement types in Sub-Contracting process?
541 – Issues of goods from warehouse to subcontractoru2019s stock

542 – Reversals of goods issues from warehouse to subcontractoru2019s stock

543 – Consumption from subcontracting stock (Automatic updating during GR)

544- Co-products receiving

545- Goods receipt of by-products from subcontracting (Stock provided to vendor)

101 – Finished good/ Sub-Contracted good received after processing

53. What are accounting entries in standard sub-contracting process?

Accounting entries in standard sub-contracting process are as follows:

For finished goods received:

Debit stock account of assembly(FG) (BSX)

Credit Change in Stock (BSV)

For amount payable to vendor:

Debit SC/JW charges (FRL)

Credit GR/IR (WRX)

For material provided to vendor:

Debit Consumption Account of components (GBB-VBO)

Credit Stock account of components (BSX)

If there is a price difference and customization is done for accounting for price difference in
subcontracting, PRD transaction key comes in picture.

54. What are the possible values of procurement type in Material Master?
Procurement type is maintained in MRP1 view of material master. This is a plant specific
view as MRP is done at plant level. Various procurement types in material master are as
follows:

In-house production (E)

External procurement (F)

No procurement

Both Procurement types (X)

55. What are the requirements for an ‘MRP Run’?

MRP should be activated in that plant

Master Data for MRP should be maintained (Planning Calendar etc.)

MRP data for material should be maintained

MRP1 view should be maintained (e.g.. Reorder point, Safety stock etc.)

MRP2 view should be maintained (e.g.. Plan delivery time etc.)

MRP can be run using MD03

56. What is a MRP Area?

MRP Area is an organizational unit for which material requirement planning can be carried
out independently. MRP Areas are of three types:

Plant MRP Area

MRP Areas for Storage Locations

MRP Areas for Subcontractors

After defining MRP areas, MRP area is assigned to material in material master.

57. What is MRP list?

The system creates MRP lists during the planning run. The MRP list always displays the
future stock/requirements situation at the time of the last planning run. The MRP list is
stored in the system until it is either deleted manually or replaced by a new list from a
subsequent planning run.

58. How will items be returned to the vendor?

When you are posting a Goods Receipt for a PO, you can also enter items that you want to
return to the vendor. To do this, you no longer have to reference the purchase order with
which the goods were originally delivered. From the item overview, choose 161 (Return for
PO) as the default value for the Movement Type. Enter the data for the return item(s) and
post the document.

59. Where do you perform a Goods Issue?

Use Transaction MIGO. It is possible that when MIGO is accessed that a different document
screen appears than the one required. This occurs because SAP remembers the last
Goods Movement transaction accessed per user login. To reach the Goods Issue Purchase
Order screen, click the Dropdown Icon in the transaction field and select “Goods Issue”.

60. How do you perform a Goods Issue?

Use Transaction MIGO. On the initial screen, enter the header data (you need not enter the
Movement Type or the Plant as these are automatically copied from the order). Choose
Goods Issue Æ Create with Reference Æ To Order… If you know the order number, enter it
directly. Using the By-products Indicator, you can simultaneously post the Goods Receipt of
planned by-products. Using the Choose transaction/events indicator, you can display all
transactions/events for an order and choose the transaction/events for which you want to
post a Goods Issue. Copy the desired item(s). Check data on the overview screen. Post the
document.

61. How do you perform an Invoice Verification?

If the Invoice refers to an existing document (PO, etc.), then the system pulls up all of the
relevant information like Vendor, Material, Quantity, Terms of Delivery, and Payment Terms
etc. When the Invoice is entered, the system will find the relevant account. Automatic
posting for Sales Tax, Cash Discount, Corrections etc. When the Invoice is posted, certain
data such as Average Price of Material and Price History are updated. Use Transaction
MIRO.

 
62. How do you display parked documents?
There are two possible transactions to use here. They are FB03 and FBV3. The first shows
all posted document types. This is the best choice if you think the document has been
posted to you actual balance. The later shows only parked documents that have not yet
posted to your expenditure balance. These documents are still encumbrances. It is the best
choice if you are trying to find which documents are still awaiting completion or approval.
This transaction is very similar to the FBV2 transaction used with P-Card reconciliation and
marking parked documents complete.

63. What do the W, V, and F fields show about the status of a document in FBV3?
An X under the W column means the document is subject to Workflow. Most documents on
this screen should have an X in this column. However, not all documents are subject to
workflow (cash deposits etc.). An X in the V column means that the document has been
marked as complete. If they are subject to Workflow, they have been sent to Workflow for
approval when they were marked complete. An X in the F column means that the document
has been approved and posted to expenditures. This column will always be empty in this
screen. An X under W, but no X under V means that you have not marked the document as
complete. If it hasn’t been marked as complete, use FBV2 to check the document and, if it
is correct, mark it as complete.

64. What MRP procedures in Consumption Based Planning?

MRP procedures in CBP are as follows:

Reorder Point Procedure

Forecast based Planning

Time phased material planning

65. What is the difference between standard purchasing organization and reference purchasing
organization?
Purchasing organization is an organizational unit within Logistics. A standard purchasing
organization must be provided to one or more plants for which it is directly responsible for
procurements.

A purchasing organization is assigned to reference purchase organization to avail

conditions and centrally agreed contracts or release orders contained in the assigned
reference purchasing organization
66. Why do we use document types in SAP?
Document types are used to distinguish the business transactions to be posted. It also
helps in determining the account types to be posted and subsequent transactions to
complete the process. Document types are defined at client level.

67. Can we receive the goods before the scheduled delivery date in scheduling agreement?
No, we cannot receive the goods before scheduled delivery date. GR can be posted on or
after the scheduled dates. Though, SAP has provided some OSS notes to resolve this.
(708973, 741385)

68. Can changes be made in PO once it is released?

This can be controlled by settings given in release indicator in PO release procedure. If it is
a significant change, it will re-trigger approval cycle.

What is the use of ‘Info Update’ indicator in purchasing documents?

This indicator is used to decide if the info record is to be created/updated or not based on
this purchasing document.

69. What is a Material Ledger?

A material ledger retains all transactions that relate to the purchase and use of materials for
producing goods. Material ledger data is valuation and control data for a material in a plant
for a specific posting period. Material ledger contains data for material movements that are
relevant to the valuation of the material.

70. What is a ‘Return Delivery’?

Return Delivery is used if we want to return goods to a vendor for any reason such as bad
quality, or bad packaging etc. In normal cases, return delivery is done by movement type
122. For creating return delivery, reason for return is a mandatory field.

71. How to deactivate a vendor so that it cannot be used for further transactions?
A vendor can be blocked at various levels as follows:

All Company Code

Single Company Code

All Purchasing Organization

Single Purchasing Organization

72. What is EAN?

An article can be carried in different units of measure. An European article number (EAN) is
created as a unique indicator for each of these units of measure. The most important use of
EANs within a company is to identify articles at the point of sale (POS) using the barcode.

73. What are basic tables used for Material Master?

Some of the basic tables used in Material master are:

MAKT: Material Descriptions

MARA: General Material Data

MARD: Storage Location Data for Material

MVER: Material Consumption

MARC: Plant Data for Material

MVKE: Sales Data for Material

MAST: Material to BOM link

74. What are the different ways to organize purchasing organizations?

A Purchasing Organization may be responsible for multiple plants and this is referred to as
“Distributed Purchasing”. On the other hand, “Centralized Purchasing” features one
Purchasing Organization per Plant. A Purchasing Organization doesn’t necessarily need to
be assigned to a Company Code. This would enable procurement for every company code
as long as buyers are acting for an individual Plant, and that Plant is assigned to the
Purchasing Organization. Hence, a plant may be assigned to more than one Purchasing
Organization.

75. What are “Special Stocks”?

Special Stocks are stocks that are accounted for but are not owned by the client, or are not
stored at a regular facility. Consignment, sales order, and project stock are examples.

76. What are some of the options available to transfer materials from one plant to another?
Although it is possible to transfer materials from one plant to another without a Stock
Transport Order, many advantages are lost including entering a vendor number, planning a
goods receipt in the receiving plant, monitoring process from PO history, and the ability to
create STO directly from a MRP PR.

77. What are some of the common Stock Transport Order Movement Types?
One step transfers of materials can be posted using MT 301. Other various transport
scenarios differ in the MTs by the Goods Issues and Good Receipts. Common Goods
Issues may use MTs 303, 351, 641, or 643 in the STO. A STOs Good Receipt often uses
MT 101.

78. What is the difference between a Purchase Order and a Purchase Requisition?
A Purchase Requisition is a document type that gives notification of a need for materials or
services. A Purchase Order is a document type that is a formal request for materials or
services from an outside vendor or plant. Procurement types may be defined at the line item
and can be standard, subcontracting, consignment, stock transfer, or an external service.

79. What is an “indirectly created” Purchase Requisition?

An indirectly created Purchase Requisition has been initiated by CBP, the PS Project
System, PM Maintenance, and Service Management, or PP Production Planning and
Control. The “directly created” Purchase Requisition, on the other hand, is created by a
person manually in the requesting department specifying what materials/services, units, and
a delivery date.

80. What is an RFQ and how is it different from the Quotation Form?
A RFQ is a purchasing document and an invitation to a vender(s) for quotation regarding
needed materials or services. If multiple an RFQ is sent to multiple vendors, the system can
automatically determine the best quote and send rejection letters in response to all others.
The RFQ and the Quotation Form are one in the same in the system as vendor’s quotes are
entered directly in the RFQ.
81. What are the transactions that will result in a change of stock?
A Goods Receipt is a posting acknowledging the arrival of materials from a vendor or
production, which results in an increase in warehouse stock, a Goods Issue which results in
a reduction in stock, or a Stock Transfer moving materials from one location to another.

82. When would it be prudent to post goods movements via the Shipping Application?
If picking, packing, and transportation operations need to be planned in detail. Also, in
shipping, you can manage movements like returns from customers, vendors, and returns to
stock. Movement Types in shipping start with a 6.

83. What is a Reservation?

A Reservation is a document used to make sure that the warehouse keeps a certain
amount of a material or materials ready for transfer at a later date. It contains information on
what, quantity, when, where from and to. Reservations help effective procurement by
utilizing the MRP system to avoid out of/lack of stock situations.

84. Can you manually generate a Purchase Requisition referencing a Purchase Order or a
Scheduling Agreement?
 

A Purchase Requisition cannot be created with reference to either of these, as they are
documents controlled by the purchasing organizations. Requirements can be automatically
generated with MRP that reference a Scheduling Agreement if the source list is maintained
for item-vendor combination.

85. How is GR/IR account related to Inventory? 

 

If you are involved with inventory, then you need the GR/IR account (Inventory Account)
when the IR is posted. If you are not involved about inventory, then the system does not
need the GR/IR account when the IR is posted; the system needs a G/L instead of the
GR/IR account.

 
86. How do planned and unplanned consumption affect Movement Types?
In a customized Movement Type, you have defined which consumption value gets posted in
the movement. Many will always be planned or unplanned, but for some there is a
dependency on if the movement references a reservation. This would be planned
consumption.

 
87. What are Departmental Views?
 

All functional areas of the system use the same material master data. The material master
data is defined in individual screens (departmental views) that can be added as needed.
Thus a material can be created with only basic data and other departments can add other
information later as it becomes available.

88. Is Material Data valid for all organizational levels?

Control of master data depends largely on how each company sets up its Organizational
levels – centralized or decentralized. Some material data is valid for all organizational levels
while other data is valid only at certain levels. (I.e.: client, plant, sales org., etc.).

89. Why would you want to create physical inventory sheets to perform an inventory cycle-count on
a material or materials?
 

For a cycle counting procedure, physical inventory documents need to be created. These
are used to record inventory levels of the material being cycle counted. Use transaction
MICN. Click on the Execute button. On screen “Batch Input: Create Physical Inventory
Documents for Cycle Counting”, perform the following, Click on the Generate Session
button and Click on the Process Session button. This procedure details how to create the
physical inventory documents for cycle counting in a batch, rather than one at a time, based
on certain criteria. This would print physical inventory documents for all material/batches
that meet those requirements.

90. What is the difference between a Blanket Purchase Order and the Framework Order?
In general, the Blanket POs are used for consumable materials such as office paper with a
short text, with item category B. There need not be a corresponding master record, for the
simplicity of the procurement. The FO, Framework Order, document type is used. Here, the
PO validity period as well as the limits are to be mentioned. The GR, or Service Entry for
the PO are not necessary in the case of Blanket POs. One need not mention the account
assignment category during creation of the PO. It can be U, or unknown and be changed at
the time of IR.

91. What is Release Procedure?

Release Procedure is approving certain documents like PRs or POs by criteria defined in
the configuration. It is sensible to define separate release procedures for different groups of
materials for which different departments are responsible, and to define separate
procedures for investment goods and consumption goods.

92. How do you create a movement type? When will movement type numbers be odd?
When prompted by a dialog box after an activity, you copy a movement type. Select the
field “Movement Type” and “Continue”. In the Define Work area, enter the movement type to
be copied in From: and the name your new movement type in the To: field. Now choose
Continue. Choose the desired movement type you want then choose Edit ÆCopy as and
re-type the selected movement type with the new type copy all dependent entries and make
sure to begin with a proper prefix (9,X,Z). All control indicators are copied to the new
movement type. Review the new movement type changing any necessary controls.
Reversal movement types are numbered as the number type plus one. The reversal for
movement type 451 (Returns From Customer) is 452. As a last step before saving your
settings, add a copy the reversal movement type and enter it in Reversal/follow-on
movement types.

93. How do you adopt standard settings for the Message Determination Facility In MM-PUR?
The Message Determination Facility is by default active and message determination
schema is supplied for all purchasing documents including POs, PRs, RFQs etc. All of the
desired message types must be maintained. Choose Master data Æ Messages Æ
Purchasing document Æ Create or Change from the Purchasing menu. Add the message
type and pick the key combination. The key combination decides the condition table where
the condition record is stored. Enter all needed items. Next screen, create the individual
condition records. Using the menu options Goto Æ Means of Communication, enter the
proper peripheral, or output for each message record. Save.

94. How do you set price control for receipts (goods/invoice) telling the system how to value stocks?
Transaction Code OMW1 allows you to set price control to S (Standard Price) or V (Moving
Average Price). Under Standard Price (S), the materials and accounting documents are
both valid. The one with the lower value will be posted with a price variance entry.

95. How do you access the Materials Management Configuration Menu?

Transaction Code OLMS has a host of options that are not accessible through the IMG.

96. How are the various MM configuration Transactions accessed?

Transaction Codes OLMD accesses MM-CBP, OLMB accesses MM-IM, OLME accesses
MM-PUR, OLML accesses MM-Warehouse Management, OLMS accesses Material Master
Data, and OLMW is the proper transaction for valuation and account assignment.

97. What are some of the more important Materials Management Tables?
EINA contains general data of the (Purchasing) Information Record; EINE includes
Purchasing Organization of the same. MAKT is the Materials Description table, MARA-
General Materials data, MARC-Plant Data for Materials, MARD-Storage Location Data for
Material, MAST-Material to BOM Link, MBEW-Material Valuation, and MKPF-Header
Material Document. Some of the tables that directly pertain to the document types are T156
Movement Type and T023/T024 Groups Material and Purchasing.

98. Can you add custom fields to POs and RFQs?

Yes. You must add custom fields to the customer including structures I_EKKODB and
I_EKPODB. Create a project via CMOD for enhancement MM06E005. Follow the
documentation for MM06E005, and create the sub-screens for function group XM06 using
transaction SE80. Add fields to the appropriate screen. It is recommended that you call the
screen fields EKPO_CI-name or EKKO_CI-name. This simplifies transferring data to/from
the screen. Put code in EXIT_SAPMM06E_018 to transfer data from subscreen to structure
E_CI_EKPO. Put code in EXIT_SAPMM06E_016 to transfer data from database to sub-
screen using structure I_CI_EKPO. In the PBO of the sub-screen, do any processing to
make fields display only, or hide them.

99. When can a Production Resource/Tool be defined as a material?

Inventory functions are to be carried out for that PRT. The information required to be input is
dependent upon which department views are being created. Thus, material master
information is typically entered at different times by numerous system users. Note that to
add a view, the “Create Material” transaction is used rather than the “Change Material”
transaction.

100. When creating a new Material, what may prompt some of the possible Material Types?
Pressing F4 gives a list of choices. Select the material type for the material you are
creating. For example, FHMI for Prod. Resources/tools, ROH for Raw Materials, FERT for
Finished Products, etc.

101. How do you create a Vendor?

Use Transaction Code XK01. Add the Vendor name, Company Code, Purchasing
Organization, Account Group, and the Vendor address. Next add the country, Bank Key,
Bank Account, Account Holder (an actual name), and then save the data.

102. How are materials assigned to vendors?

Information Record links materials to the vendor, thus facilitating the process of selecting
quotations. Use Transaction Code ME11 or Logistics Æ Material Management Æ
Purchasing and then Master Data Æ Info Record Æ Create.

 
103. What data does the Information Record contain?
The Information Records has data on Units of Measure, Vendor price changes after a
certain level, what materials have been procured by a specific vendor, price and conditions
for relevant Purchase Organization, Tolerance limits for over/under delivery, Vendor
evaluation data, planned delivery time, and availability time the vendor can supply the
material.

104. How do you create the Information Record based on the Material Master record?
In the IMG, Master Data Æ Info Record Æ Create. Enter Vendor Number, Material Number,
Purchasing Organization or Plant Number. Enter the number of the Information Record if
external number assignments are used (left blank, the system will assign a number). Enter
the General Data for the Vendor, order unit, origin data, and supply option, Customs Tariff
Number. Next, enter the Vendor’s planned delivery time (used for scheduling), responsible
Purchasing Group, and Standard PO quantity (used in conjunction with price scales for
price determination). Check the Control Data. The tolerance data and the responsible
purchasing group are taken as default values from the Material Master record. Enter the net
price. Now, from the top of the screen Go To Æ Texts to display the text overview. You can
enter the info memo or the PO text. If the PO text is already defined in the Material Master
record, it appears as a default value. Save the record

105. What is the difference between a PR with a Master Record and without a Master Record for the
material being ordered?
If the master record exists, then all of the information about the Source List, Information
Record, and Vendor Evaluation already exist in the system. If we don’t have a Master
record for the material we are ordering, the material is generally being ordered for direct
usage or consumption. You can specify which consumption account is to be charged which
is also known as Account Assignment. For example, we assign the purchase costs
associated with a requisition to our sales order or cost center. If the first situation exists,
many times purchasing enters into a longer-term purchasing agreement with a Vendor,
which is called an “Outline Agreement”. If the Outline Agreement is done, then Purchasing
cannot issue a purchase order against a PR. It can only set up such an agreement (either a
“Contract” or a “Scheduling Agreement”).
1. What is SAP MM?
Answer: SAP MM (Material Management) is an operative module in SAP that deals
with appropriation administration and material superintendence. The MM module
comprises system configuration, master data, and activities to finish the procure to pay
method.
Top 50 SAP MM Interview Questions and Answers Pdf
2. What is SAP? How is it used in industries?
Answer: SAP is the most popular enterprise resource planning (ERP) software
application used to provide enterprise business solutions. It was first introduced in 1972
in Mannheim, Germany. SAP stands for Systems, Applications, and Products in Data
Processing.
The SAP provides complete business solutions by integrating various business tasks
such as sales, purchase, and production. SAP takes information from one business
process and incorporates it into another business process, thereby speeding up all
business processes. For example, information about the raw material in stock is used
by the production department to determine how to prepare products.
SAP is widely used in various industries because as it updates and processes important
data very quickly, it can automate business processes and provide real-time solutions
for businesses.
3. What is a Purchase Order?
Answer: Purchase order is the regular and final approval of the demands which is given
to the vendor to fulfill material or services. A purchase order will combine essential data
like name of material with its identical plant, aspects of purchasing company with its
corporation code, the name of a vendor, and date for transportation of material. Top 50
SAP MM Interview Questions And Answers Pdf
4. List out the important field in purchasing view?
Answer: The critical fields in purchasing view are
The base unit of measure
Order unit
Purchasing group
Material group
Valid from
Tax indicator for the material
Manufacturer part number
Manufacturer, etc.

5. How do you post a goods receipt?

Answer: Path to post Goods Receipt −
Logistics ⇒ Materials Management ⇒ Inventory management ⇒ Goods movement ⇒
Goods movement

6. How are the consignment stocks created?

Answer: Consignment stocks are created in the normal purchase order (PO) or
requisition, but the main thing to consider is that you must enter the K category for the
consignment item. As a result, the goods issued are posted to consignment stores and
the invoice receipt is not generated.
7. Define the consignment cycle?
Answer: Consignment cycle is similar to the purchase cycle, except that when you
create goods receipts of the consignment stocks, only quantity (QTY) is updated and no
accounting documents are created. Once the goods are utilized, consignment is settled.
The value of the consumed or issued consignment stocks is taken from the active
purchase info record. Top 50 SAP MM Interview Questions And Answers Pdf
8. How is consignment material procured?
Answer: Consignment material is procured through purchase requisitions, POs, and
outline agreements.
Top 50 SAP MM Interview Questions And Answers Pdf

9. How can we see the consignment stocks in SAP?

Answer: You can see the consignment stocks in SAP by using the following functions:
· Display consignment info record
· Display the stock overview
· Display consignment stocks
10. What do you mean by reservation?
Answer: Sometimes, the stock requires being obstructed in progress so that it can be
accessible at a selective point in time. This is recognized as a booking. Reservation
guarantees that stock is ready and it can be utilized when needed. Booked quantity can
be inspected by code MBE. 
11. Explain what is CBP? What is the difference between CBP and MRP?
Answer: CBP is the earlier consumption amounts of stock; it is utilized to determine
future demands. On the evidence of past expenditure costs, the net demand for goods
is estimated.
The distinction between CBP and MRP is that while you intend materials managing
MRP, you have to foretell the materials necessary based on trades and services
outlining (SOP). While in CBP you possess to foretell the material necessary based on
traditional demand for materials.
12. What is the movement type for Goods issue reversal ?\
Answer: Movement type is 262 in Goods issue reversal
13. Why is the receipt of the goods imported to a company?
Answer: Goods receipt indicates a receipt or inward movement of stock of materials or
goods. When an external vendor provides stock to the company, the receipt of the
goods is generated as a purchase order, and when the material is produced in-house,
the receipt of the goods is generated as a production order. A goods receipt is important
to a company because using a goods receipt moves material into stock, updates the
stock levels, and thereby indirectly enables the production process.
14. How is a goods receipt performed?
Answer:
 The steps to perform a goods receipt are as follows:
 Enter the header data.
 Select the movement type and the purchase order number.
 The document is posted in the database.
15. What are some of the movement types for stock transport order?
Answer: One step transfers of materials can be posted using movement type 301.
Other movement types are 303, 351, 641, or 643 in the stock transport order.
16. What is the difference between purchase requisition and purchase order?
Answer: A purchase requisition is an internal document and it is a request that is made
to purchasing organization to procure a certain list of material while purchase order is a
formal document that is given to vendor containing a list of items to be procured from
the vendor.
Top 50 SAP MM Interview Questions And Answers Pdf

17. How do you perform an Invoice Verification?

Answer: If the Invoice refers to an existing document
(PO, etc.), then the system pulls up all of the
relevant information like Vendor, Material, Quantity,
Terms of Delivery, and Payment Terms, etc. When
the Invoice is entered, the system will find the
relevant account. Automatic posting for Sales Tax,
Cash Discount, Corrections, etc. When the Invoice
is posted, certain data such as Average Price of
Material and Price History are updated. Use
Transaction MIRO.
18. How do you display parked documents?
Answer: There are two possible transactions to use here.
They are FB03 and FBV3. The first shows all
posted document types. This is the best choice if
you think the document has been posted to your
actual balance. The later shows only parked
documents that have not yet posted to your
expenditure balance. These documents are still
encumbrances. It is the best choice if you are
trying to find which documents are still awaiting
completion or approval.
This transaction is very similar to the FBV2
the transaction used with P-Card reconciliation and
marking parked documents complete.
19. What are the industry-specific solutions available in mySAP?
Answer:
The mySAP ERP application presents business clarifications for about all enterprise,
including chemical, automotive, and media. Several industry-specific resolutions ready
in mySAP involve the following:
1. mySAP Automotive
2. my SAP Aerospace and Defense
3. my SAP Consumer Products
4. my SAP Banking
5. my SAP Chemicals
6. mySAP High Tech
7. mySAP Engineering and Construction
8. my SAP Healthcare
9. my SAP Higher Education and Research
10.my SAP Insurance
11. my SAP Media
12. my SAP Oil and Gas
13. my SAP Mill Products
14. my SAP Mining
15. my SAP Public Sector
16. my SAP Pharmaceuticals
17. my SAP Service Providers
18. my SAP Retail
19. my SAP Telecommunications

20. mySAP Utilities20. How do you check Quota Rating?

Answer:
Quota rating = (Quota Allocated Quantity + Quota Base Quantity)/Quota .

21. The material does not have a master record. How can we procure that?
Answer: There may be cases while a material does not have a master report. You can
accomplish various purposes in several situations to obtain the master disk. For
example:
· You can produce a material master disk if there is no material master record for
appropriate material.
· You can stretch the material master disk if the material master record survives for an
appropriate material simply the user administration does not have the original data.
· You can also enlarge the material master record if the material master record survives
for a selective material and the user section has the master information but it has been
listed in a various organizational level.
22. State the importance of classification data?
Answer: Classification data allows you to search for materials on the basis of the
characteristic values entered into the classes. This feature is very useful when the
customer wants to search for a particular vendor and a particular batch.
23. Explain the terms Planned delivery and GR processing time?
Answer: Planned delivery means a number of calendar days required to obtain the
material, and GR processing means the number of workdays required after receiving
the material for inspection and placement into storage.
Top 50 SAP MM Interview Questions And Answers Pdf

24. What is the last step in the Procurement cycle?

Answer: Invoice verification marks the end of procurement after purchase order and
goods receipt.
Invoice posting will update all related documents in financial and accounting.

A blocked invoice that varies from the actual invoice can be processed through invoice
verification.
25. Briefly describe the history of the SAP software?
Answer:  The SAP software was improved by an organization of the corresponding
name. SAP (the company) was established in 1972 by five former IBM employees:
Dietmar Hopp, Hans-Werner Hector, Hasso Plattner, Klaus Tschira, and Claus
Wellenreuther. SAP delivered its mainframe outcome, called SAP R/2, in 1979. The
client/server version of the SAP software, called SAP R/3, was released in 1992. Now,
SAP is the biggest businessperson of the regular business-application software. SAP
regularly performs scalable solutions to its customers, empowering them to respond to
dynamic market conditions and supporting them to secure a benefit above their rivals.
Some of the major SAP applications presently available are defined in question 4 and
include SAP R/3, my SAP ERP, mySAP Customer Relationship Management (CRM),
mySAP Supplier Relationship Management (SRM), mySAP Supply Chain Management
(SCM), and mySAP Product Lifecycle Management (PLM), to name a few.
26. Why is SAP so popular? What are some of the other ERP applications
available in the market?
Answer: SAP is the most popular ERP software available because it updates and
processes business data in real-time. Available ERP software can be divided into two
categories: open-source ERP software and proprietary ERP software. Some of the most
commonly used ERP applications are listed in the following table.
27. What is mySAP ERP? What business components can it be classified into?
Answer: my SAP ERP is the next-generation ERP application from SAP AG in
Germany, and was first launched in 2003. The mySAP ERP application has all the
features of previously released SAP ERP software, such as SAP R/3 and SAP Strategic
Enterprise Management (SEM), along with its own extensions. The mySAP ERP
application provides e-commerce solutions by using Web technology. The mySAP ERP
application has the following advantages:
1. Mobile infrastructure, which improves workforce mobility
2. Transparency through a business intelligence framework
3. Delivery of people-centric services
4. Faster access to information, which facilitates quick decision making
5. Seamless integration of processes throughout the business
mySAP ERP includes the following products:
1. mySAP Enterprise Resource Planning (ERP)
2. mySAP Supply Chain Management (SCM)
3. mySAP Supplier Relationship Management (SRM)
4. mySAP Customer Relationship Management (CRM)
5. mySAP Product Life Cycle Management (PLM)

mySAP R/3 can be classified into the following business components:

1. Financial applications
2. Human resource applications
3. Logistics
4. Sales and distribution applications

28. Why is batch record important?

Answer: A batch represents a quantity of a particular material processed at the same
time with the same parameters. These materials, produced as one batch, have the
same characteristics and values, which may vary from the materials of another batch
produced on the same day.
A batch record is important because batch records indicate that the batch conforms to
the Current Good Manufacturing Procedures (GMP). The batch record also contains
specific information about the product tested, analytical methods, and test results.

29. What benefits will be realized after implementing SAP in any organization?
Answer: After the installation of SAP R/3 in an organization, the following changes will
occur:
1. Improvement in project management and project execution capabilities
2. Integration of suppliers and subcontractors
3. Optimization of sales-order capabilities
4. Comprehensive business support specific to a particular industry type
5. Minimal cost of ownership
6. Uniformity of business processes
7. Ability to make safe strategic choices
30. What are the different modules in SAP R/3?
Answer: Fi and CO. These modules are further grouped into various business-
functional areas. The functional areas and the SAP R/3 modules in those functional
areas are as follows:
– Financial applications—Deals with an organization’s financial matters, such as
preparing and analyzing financial documents and reporting the document output to the
appropriate authorities for further processing. To manage all these concerns, the
following SAP R/3 modules are grouped in this functional area:
FI—Financial Accounting
CO—Controlling
EC—Enterprise Controlling
IM—Investment Management
TR—Treasury
Human resources—deals with documents related to an organization’s human resources
department. The SAP R/3 modules grouped in this area help an organization to manage
processes such as salary creation and distribution, employees’ payroll across the
organization, and transferring data to other relevant departments, such as finance. This
area consists of the following modules:

Personnel Management
Time Management
Payroll
Training and Event Management
Organizational Management
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Logistics applications—This is the largest area covered by SAP R/3. This area helps
manage broad-level business processes such as sales and distribution of products,
materials management, production planning, and quality management. This area
consists of the following modules:

MM—MaterialsManagement
SD—SalesandDistribution
PP—ProductionPlanning
PM—PlantMaintenance
LO—Logistics
QM—QualityManagement
PS—ProjectSystem
WM—Warehouse Management 

31. What is SAP R/3?

Answer: SAP R/3 is an ERP software that was officially launched in 1992. It is a
replacement for the SAP R/2 mainframe computing-based ERP software and is based
on client-server computing. With the advent of client-server computing, SAP AG in
Germany (founder of the SAP ERP software) launched SAP R/3 to provide client-
server-based real-time business solutions. The letter “R” in SAP R/3 represents the
real-time business data processing, while the number “3” represents the three tiers in
client-server computing.
1. The three tiers in client-server computing are a presentation (client), application
(business logic), and database (stores the actual business data).
2. SAP R/3 integrates various business areas, such as sales, purchase, and
procurement, by using different functional modules, such as Materials Management
(MM), Sales and Distribution (SD), Financial (FI), Controlling (CO), and Human
Resource (HR).
3. Different versions of SAP R/3 include 3.1i, 4.0b, 4.5b, 4.6b, and 4.6c; the latest
version is 4.70.

32. What are the core functionalities of the SAP system?

Answer: The core functionalities of the SAP system are Sales and Distribution (SD),
Materials Management (MM), Financial Accounting (FI), and Production Planning (PP).
In the first phase, companies implement the SAP software with these core
functionalities. Later, in the second and third phases, they may also introduce other
functionalities, such as Controlling (CO), Warehouse Management (WM), and Human
Resource (HR). However, the types of modules and the phasing of implementation
depends solely on the type of industry in which the client works, as well as the
organization’s readiness and the urgency with which the integrated enterprise system,
such as SAP, must be adopted.
33. How can we define an MM module? What is its importance in SAP R/3?
Answer: MM stands for Materials Management and is a part of the Logistics functional
area of SAP R/3. It is an important SAP R/3 module because it helps manage broad-
level business activities, such as procurement, valuation and assignment, batch
management, and materials storage. Since materials are the most precious resource of
an organization, extreme care needs to be taken in all the processes related to
materials management. Efficient materials management is the essence of the MM
module of SAP R/3.
34. How is the MM module integrated with other modules of SAP?
Answer: The MM module deals with materials procurement on the basis of the
production required; therefore, it is linked with the PP module.
The SD module is proportionally related to the MM module because it uses information
about the quantity of material sent for production.
The WM module is related to the MM module because the MM module maintains
information about materials storage and materials transfers inside an organization.
The FI module is also related to the MM module, because every operation performed in
the MM module directly impacts the financial processes of the organization.
35. What are the levels of organizational units in Enterprise Structure in SAP R/3?
Answer:  The customer is the greatest level part of the organizational units in
Enterprise Structure in SAP R/3. The customer is tracked by the company code, which
denotes a part of its own accounting, stability, and profit and loss (P&L). The
succeeding level of organizational units in Enterprise Structure is the factory, which
denotes an operational unit of a business.
36. How are batch numbers assigned?
Answer: The batch number is predefined in SAP. You can modify the batch numbers
both by utilizing the OMAD activity code and by utilizing the exploration path IMG >
Logistics-General > Batch Management > Batch Number Assignment > Maintain
Internal Batch Number Assignment Range.
Observe either of the pair form steps to modify the batch number:
· You can assign a batch number internally utilizing the internal number field, either by
utilizing the OMCZ activity code or by succeeding the navigation path Display IMG >
Logistics-General > Batch Management > Batch Number Assignment > Activate Internal
Batch Number Assignment > Initiate Batch Number Assignment.
· You can further configure the method to provide electronic numbering of a batch by
viewing the navigation path Display IMG > Logistics-General > Batch Management >
Batch Number
37. Define consignment stock. What are the main features of consignment stock?
Answer: Consignment, in a general sense, is the act of holding the ownership of
materials but storing the materials at some other premises until the materials are sold or
shifted somewhere else. The stored materials are known as consignment stock in the
SAP system. Therefore, a stock that is stored at the customer’s premises but is the
supplier’s property until the stock is transferred to the customer’s stock list is called the
consignment stock. The main features of the consignment stock are as follows:
· You can combine the consignment stock with your available stock at any point in time.
· You can evaluate the consignment stock in any currency.
· The price of the consignment stock fluctuates. This means that you can determine the
price of the consignment according to the market conditions.
· You can price the consignment stock in any unit.
· You can use different features of purchasing, such as discounts, in the consignment
stock.
· The consignment stock is evaluated at a price quoted by different vendors.

38. Define “client.” What is its importance in SAP?

Answer: A customer can be assigned to a person, organization, or company that
acquires goods from a different personality, business, or industry. In terms of SAP, a
customer is determined as a system that has its own master records and a collection of
records. The customer is essential in SAP because it collects and manages data
regarding the company anywhere SAP is performed.
39. How do we create a client in the MM module?
Answer: You can create a client in the MM module either by using the transaction code
SCC4 or by performing the following steps:
Select SAP Menu > Tools > Administration > Administration > Client Administration.
Double click SCC4–Client Maintenance. The display view Clients: Overview screen
appears.
Select Display > Change. The information dialog box appears.
Click Continue. The change view Clients: Overview screen appears, where you can
create a new client.

40. Mention what is the transaction code used to extend the material view?
Answer: To extend the material view transaction, code MM50 is used.
41. How is the pricing of consignment stocks done? What information does
consignment info record contain?
Answer: Prior to ordering material from a vendor or posting a goods receipt to the
consignment stock, you need to obtain the consignment price. If the consignment
material is ordered from several vendors, the system maintains the consignment stock
of each vendor separately. The reason the system maintains the consignment stock
separately is that the price of the consignment stock may vary from one vendor to
another.
· The consignment information (info) record contains the consignment price required for
the purpose of material valuation and accounting.
42. Define “company.” How is it different from a client? What are the data in the
MM module that are maintained at the company code level?
Answer: A company is an organizational unit for which individual financial statements
are drawn per the relevant commercial laws. A company consists of one or more
company codes. Within a company, all company codes must use the same transactions
in addition to the same fiscal year breakdown; however, company code currencies can
vary.
A company is different from a client because a client can itself be a company or an
organization that has multiple companies. For example, the owner of the entire SAP
system is a client. The system will have only one operational client, but the client may
further have a group of companies.
43. What are the Features of SAP ERP?
Answer: SAP is an enterprise resource planning software which is produced by the
German corporation. SAP is an enterprise information software that was basically
designed to manage resources, information, and activities that are required to complete
business processes like procurement and managing orders, billing of orders and
management of human resources.
44. What do you mean by special stocks?
Answer: Special stocks are stocks that are managed differently as these stocks did not
belong to the company and these are being kept at some particular location.
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45. How stock is being transferred from one plant to another plant?
Answer: Stock within plants is transferred with the help of stock transport order. One
plant orders the goods internally from another plant(receiving plant/issuing plant) with
the help of stock transport order.
46. What is the use of Purchase Info Record?
Answer: Purchasing info record stores information on material and vendor supplying
that material. For Example Vendors, the current price of a particular material is stored in
info record.
47. What is an RFQ and how it is different from a quotation ?
Answer: I am a text block. Click the edit button to change this text. Lorem ipsum dolor
sits amet, consectetur adipiscing elit. Ut elit tellus, luctus nec ullamcorper Mattis,
pulvinar dapibus leo.
48. What are transactions that will cause a change in stock?
Answer: Goods receipt and goods issue will cause a change in stock as goods receipt
will increase warehouse stock and goods issue will decrease warehouse stock.
49. What do you mean by consignment stock?
Answer: On Consignment, the material is ready at our store proofs, but, it still goes to
the vendor (seller)/Owner of the stuff. If you employ the material from consignment
stocks, later you have to pay to the vendor.
50. What is invoice verification?
Answer: Once goods are obtained from the vendor and stored in the company’s
premises by goods receipt suddenly we require paying to a vendor for obtained goods
and assistance. The price to be given simultaneously with details of material is
presented by the vendor in the form of the report that is known as an invoice. Before
returning to the vendor we need to check the invoice. This method of validating invoice
and paying to a vendor is identified as 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.
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.
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.
A Purchase requisition is an internal document or external document?
Internal document, it is the phase in which purchasing department is informed about the
requirement of items or services required for business purpose.
What are the different type of Basic Procurement?
There are 2 types of Basic procurement which are shown below −

 Procurement for Stock vs Consumption

 External vs Internal Procurement
What is the difference between Procurement for stock vs consumption?
Procurement for Stock − A stock material is a material that is kept in stock. These materials
are kept in stock once received from the vendor. The stock of this material keeps on increasing
or decreasing based on amount of the quantity received or issued. To order a material for stock,
the material must have a master record within the system.
Procurement for Direct Consumption − When procurement is for direct consumption i.e. it
will be consumed as soon as it is received, the user should specify the consumption purpose. To
order a material for consumption, the material may have a master record within the system.
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 Consignment Stock?
Consignment Stocks
Material that is available at our store premises, however it still belongs to the vendor
(seller)/Owner of the material. If you utilize the material from consignment stocks, then you
have to pay to the vendor.
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.
How do you post goods receipt?
Path to post Goods Receipt −
Logistics ⇒ Materials Management ⇒ Inventory management ⇒ Goods movement ⇒ Goods
movement
T-Code: MIGO
What are the different Procurement types that you can create Purchase requisition?
Purchase requisition can be created for the following procurement types −
Standard − Getting finished material from vendor.
Subcontracting − Providing raw material to vendor and getting finished material.
Consignment − Procuring material that is kept in company’s premises and paying to vendor for
that.
Stock transfer − Getting material from within the organization.
External service − Getting services like maintenance from third party vendor.
How can you create a Purchase Order from Purchase Requisition?
Purchase Order from purchase requisition can be created by following below steps −
T-Code: ME21N
What is Request for Quotation RFQ?
Request for quotation is a form of invitation that is sent to vendors to submit quotation
indicating pricing and their terms and conditions.
RFQ contains details about goods or services, quantity, date of delivery and date of bid on
which it is to be submitted.
What is the use of document type in SAP system?
In SAP system, you use Document Type to define different methods or procedures for a
transaction.
What is free item in SAP system?
The Price will be marked zero for free item. We can tick the item as free item while creating PO
in system.
Why do you use Material type?
Material type in SAP system is used to group various materials based on some common
properties.
What is Material Status?
It is 2 digit code and is used to determine the material usability.
What are the different stock types in SAP system?

 Restricted Stock
 Unrestricted Stock
 Quality Inspection Stock
 Blocked Stock
  GR Blocked Stock
What do you understand by GR Blocked stock?
This is conditionally accepted stock and not the unrestricted stock.
What are the different Stock transfer types in SAP system?
Inter Company
Intra Company
Intra Plant
What is Intra plant stock transfer type in SAP MM?
Storage Location to Storage Location
What is an Outline agreement?
Outline agreement is a long term purchasing agreement with vendor containing terms and
conditions regarding the material that is supplied by vendor.
Outline agreement are valid up to certain period of time and cover a certain predefined quantity
or value.
Is it possible that you can use scales in Quotation?
No
What do you understand by Material Master? How Material master is maintained in SAP
system?
Material master contains information related to different material types like finished product,
raw material. Material master can be used for identifying a product, purchase material, goods
issue or good receipt, MRP and production confirmation.
For Material master data, use T-code: MM01 or go to Logistics → Production → Master Data
→ Material Master → Material → Create (General) → immediately
What is the use of BOM usage type 1 in SAP system?
It is used for Production
How do you create Purchase Order or Purchase Requisition from Material Requirement
Planning?
The PR is created according to the safety stock mentioned for the material or can be triggered
from a requirement. For creating a PO, you need to have the scheduling agreement in place.
After the MRP is run the schedule lines are generated which are nothing but the PO.
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.
1. What are the uses of SAP Material Management Module? 

SAP Materials Management belongs to the logistics aspect of ERP. It mainly

manages the procurement activities of an organization. 

It supports all material aspects of management like planning, controlling and

so on. 

It also incorporates key modules such as Sales, Distribution, Plant

Maintenance, Production Planning, Project and Warehouse Management. 

2. What does the Procurement Process in ERP comprise of? 

All activities involved in buying of materials and procuring services from
various dealers and vendors constitutes the Procurement Process. 

3. Explain the Procurement Lifecycle.

• Information and requirements gathering 
Collecting information about a product and its quantity is the first step of
Procurement. Then suppliers for that particular product who can cater to the
requirements must be then tracked down. 

• Contacting suppliers 

Once the suitable suppliers are chosen, they must be contacted for a
quotation request. 

• Background Check 

The suppliers history, quality of his previous products, terms of warranty,

service and maintenance must be investigated. Some samples may also be
investigated if needed. 

• Negotiation and Contract 

Negotiations regarding price, delivery schedule and availability are done.

After this, the contract is signed that becomes a legally binding document
between the supplier and the company. 

• Completing Order 

The order is shipped and delivered to the concerned party and supplier is
paid accordingly. Any training for installation and use is undertaken. 

• Maintenance 

Once the product is in use, continuous evaluation and feedback are given. 

4. What are the types of Basic Procurement? 

There are two categories of basic procurement. They are: 

- External and Internal Procurement 

- Procurement for stock and Procurement for consumption 

5. What are Consignment Stocks? 

Consignment stocks are those materials that are in the store premises but
still belong to the vendor. If you use material from this stock, you have to
pay to the vendor.
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6. What are the different info record types? 

The different info record types are Standard, Sub-contracting, Consignment

and Pipeline. 

7. What is the purpose of Purchase Info Record? 

Purchase Info Record is used to store the information about a vendor and
the product purchased from him. 

8. Explain a Purchase Order. 

The purchase order is the final draft of the document sent to the supplier to
supply material or services. It will contain information like details of
material, purchasing company, company code, vendor name and date of
material delivery. 

9. What is meant by Goods Receipt in SAP? 

Once the purchase order is processed by the vendor, the delivery of

materials is done. This is called a Goods Receipt. In the goods receipt phase,
the condition and quality of the material received is verified. 

10. What is meant by Request for Quotation (RFQ)? 

Request for quotation is the invitation sent to vendors to send quotation

stating pricing, terms and conditions. 

An RFQ has details about goods, services, date of delivery, quantity and date
to be submitted. 

11. What is Material Type in SAP? 

Material Type in SAP is the property used to group materials with similar
properties under one category. 

12. Name the different stock types in the SAP system. 

The different stock types in SAP system are restricted stock, unrestricted
stock, quality inspection stock, blocked stock and unblocked stock. 

13. What do you mean by Outline Agreement? 

This is an agreement made with the vendor that has all the terms and
conditions of the items purchased. This agreement has a date until it is
valid. 

14. What is meant by Material Master and how is it maintained? 

Material Master consists of information regarding the raw material, finished

product and so on. This is used to identify purchase material, product, issue
of goods, receipt of goods, and other product information. 

15. What is a Production Order? 

A Production Order is used to define the material that is produced, the

location of the plant, time of production and quantity of goods needed. 

16. What is a Contract? 

A Contract is a long-term agreement between the customer and the vendor

with regards to material or services provided over a period of time. The two
types of Contract are Quantity Contract and Value Contract.