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SAP MM Interview Questions and Answers

1. What is the difference between a Purchase Requisit ion and a Purchase Order?

A PR is an internal document that sends notification to purchase department when somematerial is service is required. PR can be generated by department that needs any materialor service.

A PO is a document sent to vendor by purchaser which is an official request of mentionedmaterial or services. POs are generally binding on purchaser, though it depends on termsand conditions mentioned in PO.

2. What are different Info Records types?

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

3. What is a consignment Stock?

The stock supplied by the vendor is in the purchasing companys premises but the companyhas no liability for the same. The liability for the company will only arise one the goods areissued 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.

4. What is Sub-Contracting cyc le in MM?

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

consumed material.

5. What is meant by Scales in MM?

When we maintain price in Info Records, we can make use of scales. It is used when priceof 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 aremaintained in various master data like info record, quota arrangement etc. from wherescales can be pulled in a Purchase Order.

6. 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 levelyou 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.

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7. Can a material be used after flagging it f or deletion?

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

8. 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 andInvoice Verification relevant to Financial and Cost Accounting.

9. What is valuation grouping code related to OBYC?

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

General practice is to use the valuation area at plant level, because valuation may differfrom one plant to another. The valuation grouping code makes it easier to set automaticaccount determination. If we need to define common account determination for severalvaluation 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.

10.What types of special stocks are available?

Various special stock types available in SAP are Consignment, Subcontracting, pipeline,project, sales order stock, Returnable transport packaging, stock transfer, and the thirdparty.

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

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

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

12.How can we create new t ransaction codes in SAP?

New transaction codes can be created using t-code SE93.

13. What are release procedures with and without classification?

Release Strategy with Classification:PR can be released at header level as well as item level.

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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.

14. What is meant by batches?

A batch is a subset of the total stock of a material. It represents a homogeneous unit whichhas unique specification. Normally, a batch is assigned to the quantity of material producedduring a given production run. A batch number uniqueness can be assigned at any of thefollowing 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 materialwith different specification in each plant.

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

15.How to handle free items in PO?

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

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

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

17.What is the use of Material types?

Material Types is used to group various materials based on some common properties. Ithelps in maintain material master data for a particular material. Using material types, wecan control which all views are required for a material type, which fields are required oroptional, the material number range etc.

18.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),

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GS(Goods supplier), PI(Invoice presented by) etc.

19. What is the use of Material Status?

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

20. What is the Price Control Indicator?

Price Control Indicator is maintained in accounting view and is used to determine how amaterial will be valuated. It can be Standard Price(S) or Moving Average Price(V). If theindicator is set to S, all inventory postings are posted at standard price maintained inmaterial master. If there are variances in any transaction due to different price, the varianceis 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 goodsmovements or invoice receipts are posted using a price that differs from the movingaverage price, the differences are posted to the stock account.

21.What are various types of Stock transfer?

The physical movement of stock between different physical locations is called as Stocktransfer. Stock transfer can be either a single step process or a two-step process. VariousStock transfers are:

Inter Company (Company to Company)Inter Plant/Intra Company (Plant to Plant)

Intra Plant (Storage location to Storage location)

22.What are various Stock Types?

In SAP, commonly used stock types are:

Unrestricted Stock (Stock that is available for use)Restricted StockQuality 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)

23.What are various procedures for count ing 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

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balance sheet key date. If variances are small enough, it is presumed that the bookinventory balances for the other stocks are correct.)

24.What is the use of Split Valuation?

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

25.What are the various s tock valuation methods?

Stock revaluation can be done by following three methods:

LIFO(Last In First Out): Materials received last are consumed first. You can assumeexample 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 pricewhichever is lower.

26.How do you set Automatic Account Assignment in MM?

Once OBYC settings are properly done, system finds the correct G/L account using thefollowing data:Chart of Accounts: Chart of Accounts is determined based on plant or company code usedin transactionValuation Grouping Code: It is determined based on the valuation area. Valuation GroupingCode is maintained in t-code OMWD.

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

Account grouping /Account Modifier (only for offsetting entries, consignment liabilities, andprice differences)Valuation class of material or (in case of split valuation) the valuation type: The valuationclass allows you to define automatic account determination that is dependent on thematerial. This can be achieved by assigning different valuation classes to the materials inmaterial master (Accounting view) and by assigning different G/L accounts to the postingtransaction for every valuation class

27. What are Transaction Keys while setting OBYC?

Since each movement type is assigned to a value string which in turn is identified with atransaction key, the goods movement determines the correct transaction key. TransactionKeys are pre-defined in the system to enable transaction postings in InventoryManagement and Accounting (Invoice Verification). Examples of pre-defined transactionkeys are:

BSX (Inventory Postings)WRX (GR/IR Clearing Postings)

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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 amaterial with standard price control. The transaction key UMB is used when the standardprice has changed and the movement is posted to a previous period. GBB is used toidentify the GL account to post to as the offsetting entry to the stock account (when notreferencing a purchase order) such as miscellaneous goods receipts, goods issues forsales orders with no account assignment, and scrapping etc.

28.What is a Business Area?

The business area is an organizational unit within financial accounting. It corresponds to adefined business segment or area of responsibility, to which value movements recorded inFinancial 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 ismaintained by t-code OMJ7.

29.What is a Cost Center?

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

30.What is a Profi t 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.

31.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. EarlierTAXINJ, which is a formula based tax procedure, was used. Now, TAXINN, which is acondition based tax procedure, is generally used. Tax procedure contains the condition typeand necessary specification for each condition type. Account keys are assigned to conditiontypes and these account keys determine the G/L to which the tax amount is to beposted(OB40). These account keys are maintained using t-code OBCN. (All these

transactions are under Financial Accounting Global Settings >> Tax onSales/Purchases >> Basic Settings). Tax codes are assigned to country codes and countryare linked with tax procedure. Thus, based on tax code, corresponding tax procedure isdetermined and then calculation is done based on condition types in that tax procedure.

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

Scrap can be maintained in BOM as operational scrap, component scrap, By-Product or

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Co-Product. Common practice is to maintain scrap as by-product and receive it back alongwith processed material.

33.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 movementtype, components are automatically consumed with movement type 543 By Products /Scrap are updated as stock provided to vendor movement type 545. Now we can receivethis scrap/ By product back in companys inventory using movement type 542 (reversal of541) with t-code MB1B.

34.What are the commonly used movement types in Sub-Contracting process?

541 - Issues of goods from warehouse to subcontractoru2019s stock542 - Reversals of goods issues from warehouse to subcontractoru2019s stock

543 - Consumption from subcontracting stock (Automatic updating during GR)544- Co-products receiving545- Goods receipt of by-products from subcontracting (Stock provided to vendor)101 Finished good/ Sub-Contracted good received after processing

35.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 insubcontracting, PRD transaction key comes in picture.

36.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 specificview as MRP is done at plant level. Various procurement types in material master are asfollows:

In-house production (E)External procurement (F)

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No procurementBoth Procurement types (X)

37.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 maintainedMRP1 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

38. What is a MRP Area?

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

Plant MRP AreaMRP Areas for Storage LocationsMRP Areas for Subcontractors

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

39. What is MRP list?

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

40.What MRP procedures in Consumption Based Planning?

MRP procedures in CBP are as follows:Reorder Point ProcedureForecast based PlanningTime phased material planning

41.What is the difference between standard purchasing organization and referencepurchasing organization?

Purchasing organization is an organizational unit within Logistics. A standard purchasingorganization must be provided to one or more plants for which it is directly responsible forprocurements.

A purchasing organization is assigned to reference purchase organization to avail conditionsand centrally agreed contracts or release orders contained in the assigned referencepurchasing organization

42.Why do we use document types in SAP?

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Document types are used to distinguish the business transactions to be posted. It alsohelps in determining the account types to be posted and subsequent transactions tocomplete the process. Document types are defined at client level.

43. Can we receive the goods before the scheduled delivery date in schedul ingagreement?

No, we cannot receive the goods before scheduled delivery date. GR can be posted on orafter the scheduled dates. Though, SAP has provided some OSS notes to resolve this.(708973, 741385)

44.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 isa significant change, it will re-trigger approval cycle.

45.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 onthis purchasing document.

46.What is a Material Ledger?

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

47.What is a Return Delivery?

Return Delivery is used if we want to return goods to a vendor for any reason such as badquality, or bad packaging etc. In normal cases, return delivery is done by movement type122. For creating return delivery, reason for return is a mandatory field.

48.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 CodeSingle Company Code

All Purchasing OrganizationSingle Purchasing Organization

49.What is EAN?

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

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50.What are basic tables used for Material Master?

Some of the basic tables used in Material master are:

MAKT: Material DescriptionsMARA: General Material DataMARD: Storage Location Data for MaterialMVER: Material ConsumptionMARC: Plant Data for MaterialMVKE: Sales Data for MaterialMAST: Material to BOM linkMARM: Unit of MeasurementMBEW: Material Valuation