This FAQ is intended to meet the needs of SAP MM students and professionals. We have listed most commonly ask sap mm interview questions in SAP MM Module .
Table of Contents
SAP MM Interview Questions and Answers
SAP MM (Material Management) is a crucial SAP module that handles procurement handling and material management. It includes master data, system configuration, and transactions related to the procure-to-pay process. Essential components include determining requirements, source determination, vendor selection, order processing, order follow-up, goods receipts and inventory management, and invoice verification. Special stock types include subcontracting, consignment, project stock, pipeline stock, sales order stock, stock transfer, and returnable packaging with customers. Key fields in the purchasing view include base unit of measure, order unit, purchasing group, material group, validity dates, tax indicator for material, manufacturer part number, and manufacturer details. Batch records are important for ensuring adherence to Good Manufacturing Practices (GMP). To link documents to vendor master records, use transaction code XK01 or navigate through the menu path. The information record contains data related to units of measurement, vendor prices, materials used by specific vendors, tolerance limits for under-delivery, vendor evaluation data, planned delivery time, and availability status for goods.
Can we assign one plant to many company codes?
No, only one company code can be assigned to a plant. However, we can assign to one company code as many plants as we like.
What is the function of a purchasing organization in MM? What is the difference between a standard purchasing organization and a reference purchasing organization?
The Purchasing Org is a logistics organization unit, which procures materials and negotiates with various pricing deals with suppliers. One or more plants assign to the Purchasing Org for procurement. The Purchasing Org shall be responsible for terms of use and central agreements or delivery orders of the reference purchasing organization included in the reference purchasing organization.
What is the significance of purchasing document types in SAP?
Purchasing document types are used for number range , release strategy & mapping specific business scenarios .
What is the difference between a Purchase Requisition and a Purchase Order?
A Purchase Requisition is an internal document that sends a notification to the purchasing department when some material or service is required for a particular date. In general procurement or Purchasing department that needs any material or service can generate PR.
A purchased order is a document sent to the vendor by the purchaser which is an official request of mentioned material or services with details of qty, price, delivery date, etc.
What are the possible values of procurement types in Material Master?
MRP Type indicates the Procurement type in SAP MM.The Procurement type is maintained in the MRP1 view of the material master. This is a plant-specific view as MRP is done at the plant level. Various procurement types in the material master are as follows:
- In-house production (E)
- External procurement (F)
- Both Procurement types (X)
- No procurement
Can we change the valuation class of a material?
The materials should not have valued inventory in the current or the previous period when the material valuation class is changed. Open purchase orders or delivery schedule lines.Production order for which goods movement has already taken place in the system.If any of the above conditions fail, then follow the procedure mentioned.
- If valuated stocks already exist, We can change the valuation class only as per the following way :
- Post material inventories on an interim account.
- In the material master record, change the valuation class.
- post back to its original account stocks of the material.
- If open purchase orders already exist, we can only change the valuation class if we first flag the corresponding purchase order items for deletion.
- If production orders exist for which a goods movement has already taken place, we can only change the valuation class if we first set the status of the production orders to Deleted.
How does the system pick price in PO?
In vendor master record schema group vendor is assigned and in purchasing organization schema group purchasing organization is assigned. The schema group vendor and schema group purchasing organization are assigned to pricing procedure XX0000. Now, whenever a PO is created system will pick the price from procedure XX0000.
I have a scenario in which there are two line items and I want to have a different pricing procedure for the second line item. How can I achieve this?
- First-line item schema group vendor and schema group purchasing organization will pick the pricing procedure.
- For the second-line item, we can either do some setting in the info record or maintain a condition record with material and vendor and try it.
What are the steps involved in creating a pricing procedure?
Creation a pricing procedure, the steps will be as below
- Create Condition tables
- Create an access sequence by placing the different condition tables in a specific sequence.
- Create the condition types and assign the Access sequence to the condition type
- Create the pricing procedure and assign all condition types in sequential order as per the business requirement and pricing needs.
What is the difference between automatic / Manual condition type PB00 and PBXX?
If there is an info record for material then the system picks the price from the info record and the condition type will be PB00 and if there is no info record for material then we need to input the price manually and the condition type will be PBXX.
How to create Tax calculation procedure in MM?
For each line item of a PO, tax can be determined on the basis of a separate 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. The tax procedure contains the condition type and necessary specifications for each condition type. Account key type is allocated and the G/L to which tax amount is to be added is determined by these account keys (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 countries are linked with tax procedure. Thus, based on the tax code, the corresponding tax procedure is determined and then a calculation is done based on condition types in that tax procedure.
How does the system calculate non-deductible taxes?
Simply system will calculate non-deductible taxes based on the condition types assigned to the pricing procedure
How can we restrict a user to creating only service purchase orders?
In define document types we can create a Z document type and allow only item category D (Services) With the help of the Security team we can control the user authorization to create only PO with the above Z document type.
What are different Info Records types?
Different Info Record types are as follows Standard, Consignment, Sub-Contracting, and Pipeline.
What is the use of the ‘Info Update’ indicator in purchasing documents?
The indicator is used for determining whether or not this purchasing document is intended to create / update the information record.
What is a consignment Stock?
The stock supplied by the vendor is on the company’s premises but the company has no liability for the same. The liability for the company will only arise once the goods are issued from the consignment stock for use. However, in this case, even before the use, the purchasing company can check in the system how much stock is lying in inventory.
What are the steps involved in a consignment cycle?
- Create consignment info record with proper tax code.
- Create PO with item category K
- GR process, no check of the invoice verification, but settlement by transaction with MRKO.
What is the subcontracting cycle in MM?
In subcontracting, the subcontractor receives the finished goods from raw material or input material. With item category ‘L’ a sub-contracting PO is created. The supplier is sent the input material for movement type 541 processing. The movement type 543 is performed automatically with the use of movement type 101 and takes care of the consumed material.
How do you adjust excess or underconsumption of raw material in subcontracting?
This is done by subsequent adjustment transaction, ME2O Choose subsequent adjustment from the list and input the SC PO number and the line item for which we want to post the subsequent adjustment. If it is under consumption select the under consumption indicator and if it is excess consumption do not select under consumption indicator.
How is scrap material taken care of in sub-contracting?
Scrap can be kept as a scrap, scrap component, by-product or co-product in the BOM. Maintaining scrap as the by-product and receiving it with processed material is common practise.
How are the subcontracting by-products handled?
When we create BOM using CS01, we can maintain main components with + ve quantities and By-Products / Scraps with – ve quantities. When we make Goods Receipt for Subcontracting Purchase Order with 101 movement type, components are automatically consumed with movement type 543 movement type and By-Products / Scrap are updated as stock provided to the vendor with movement type 545. Now we can receive this scrap/ by-product back in the company’s inventory using movement type 542 (reversal of 541) with t-code MB1B.
What are the commonly used movement types in Sub-Contracting process?
- 541 – Issues of goods from warehouse to subcontractors stock
- 542 – Reversals of goods issues from warehouse to subcontractors stock
- 543 – Subcontracting inventory consumption (Automatic updating during GR)
- 544 – Co-products receiving
- 545 – Goods receipt of by-products from subcontracting (Stock provided to the vendor)
- 101 – Goods received after processing / sub-contracted goods.
What are accounting entries in the standard sub-contracting process?
Accounting entries in the standard sub-contracting process are as follows:
Finished goods received:
Assembly Finished Goods account (BSX)..Debit
Change in Stock (BSV)….Credit
Amount payable to vendor:
SC/JW charges (FRL)…Debit
GR/IR (WRX)….Credit
Material provided to vendor:
Consumption Account of components (GBB-VBO) ….Debit
Stock account of components (BSX)…….Credit
If there is a price difference and customization is done for accounting for price difference in subcontracting, the PRD transaction key comes in picture.
What is meant by Scales in MM?
Scale in a condition record that defines specially prices, discounts, or surcharges for various order quantities or values.Scales are maintained in various master data like info record, pricing arrangement. The scales from which the purchase order can be pulled. For instance, the price is Rs. 100 for 500 parts of any material, but if the order quantity is greater than 500 to 1000, the price is Rs. 90.
How to Flag a material for deletion?
It always recommanded Before deleting the material, it must be flagged for deletion using the Archive programme.Customer level, plant level, or storage location level can be used for a deletion flag. Regardless of the level, you flag a deleted material, it is flagged at all relevant lower levels for deletion. MM06 is used to flag a deletion material. Then we can delete the material by MM70 Before the material can be deleted there must be no open POs or stock of the material. We need to delete the material at the closing of a period.
Can a material be used after flagging it for deletion?
Yes, it may be used until it is actually deleted even after flagging a deletion material. When you use the material, it just sets out a warning message. If we want a material to be blocked for any use with immediate effect, we should use a material status that is there in Basic View 1 for a general level or in MRP 1 view for plant-level blocking.
How is MM linked to FI?
MM is linked to FI by valuation class in Accounting 1 view of material master. The valuation class links the transaction key (like BSX, GBB, etc) to the chart of accounts and G/L accounts in the OBYC transaction code.
What is the function of OBYC?
OBYC links MM with FI. OBYC is a t-code used for configuring Automatic Account Posting. In the case of Inventory Management and Invoice Verification relevant to Financial and Cost Accounting, postings to G/L accounts are made automatically.
What is valuation grouping code related to OBYC?
Valuation grouping code is used to group the valuation areas, In SAP, we can have valuation level at the Company code level or at plant level. Because valuation varies from plant to plant, it is common practise to use the valuation area at the plant level. The valuation grouping code simplifies the setup of automatic account determination. If we need to define a common account determination for multiple valuation areas, we can use the same valuation grouping code for all of them. In OMWD, we can keep the valuation group code for different valuation areas.
How does the system hit the G/L accounts when we do inventory postings like GR?
In OMJJ the movement type is linked to transaction key (like BSX, GBB etc) which is linked to G/L account. Whenever any inventory posting is done movement type is used which hits the transaction key which hits the G/L accounts.
How do you set ‘Automatic Account Assignment’ in MM?
Once the OBYC settings are correct, the system uses the following information to locate the correct G/L account: Accounts Chart: The plant or company code used in the transaction determines the Chart of Accounts. Code for Valuation Grouping: It is determined by the valuation zone. The Valuation Grouping Code is kept in t-code OMWD. Transaction Key: For example, BSX, GBB, and so on. Transaction keys are generated automatically based on the transaction (invoice verification) or the type of movement (inventory management). Account Modifier / Account Grouping (only for offsetting entries, consignment liabilities, and price differences) Material valuation class or (in the case of split valuation) valuation type:
The valuation class allows us to define automatic account determination that is dependent on the material. This can be accomplished by assigning different valuation classes to the materials in the material master (Accounting view) and assigning different G/L accounts to each posting transaction.
What are ‘Transaction Keys’ while setting OBYC?
Transaction Keys are pre-defined in the system to enable transaction postings in Inventory Management and Accounting (Invoice Verification) in FI/ MM integration. There is a value string in MM for each of the movement types that stores these possible transactions. The pre-defined transaction keys are as follows:
- Inventory Postings-BSX
- GR/IR Clearing Postings-WRX
- Cost/Price differences-PRD
- Revenue/Expenses from revaluation-UMB
- Offsetting entries in Stock postings-GBB.When not referencing a purchase order, it is used to identify the GL account to post to as the offsetting entry to the stock account, such as miscellaneous goods receipts, goods issues for sales orders with no account assignment, and scrapping scenarios.
- Similarly, Transaction Keys BSX, WRX, and PRD are relevant for a GR with reference to a purchase order for material with standard price control.
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.
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. Contracts do not specify specific delivery dates.. Contracts can be of two types: Value Contract or Quantity contract In Scheduling agreements,
We can enter scheduling lines that specify the quantity to be delivered on a specific date. The plant must be registered in Scheduling agreements A before materials can be delivered to it. These are typically used for materials with predictable requirements.
Can we expect to receive the goods before the agreed-upon delivery date?
No, we will not be able to receive the goods prior to the scheduled delivery date. GR can be posted before or after the specified dates. However, SAP has provided some OSS notes to address this. (((708973, 741385))
What are release procedures with and without classification?
Release Strategy with Classification allow the document can be released at both the header and item levels. It can be used for both internal and external documents such as Purchased orders and Purchased requisition.
Release Strategy Without Classification allowed document can only be released at the item level in this case. It can only be used for internal documents like the Purchased requisition. This strategy is only applicable to four parameters such as
- Account assignment category
- Plant
- Material group
- Purchased requisition value.
Can we use the release procedure without classification for PO?
No we can use only release procedure with classification (where release at header or item level is possible) for PO. PO document can be released at header level only.
What is the difference between a release strategy for a PR and that for a PO?
Basic difference is that PR can be released at item level or at a header level. However, PO can be released only at header level.
Can changes be made to the PO after it has been released?
This is controlled by the settings in the release indicator in the PO release procedure. If there is a significant change, the approval cycle will be restarted.
How do you configure the release procedure in SAP?
- Select fields on which our release strategy will depend like a plant, purchasing organization, document type, the total value of item etc and create characteristics for the fields using transaction CT04
- Assign the characteristics to communication structure CEKKO (for PO) and CEBAN (for PR)
- Step 2. Create a class with a suitable description and assign it to class-type 032
- Step 3. Create the release strategy as follows.
- Create Release group
- Create Release codes
- Create release indicator
- Create a Release strategy and assign the release group and release codes to it.
- Create classification values for the selected characteristics for the release group
- Simulate it and finally we can test the release strategy by creating a PO/PR.
What is meant by batches?
A batch is a subset of a material’s total stock. It denotes a homogeneous unit with a distinct specification. A batch is typically assigned to the amount of material produced during a given production run. Batch management is used in the modules MM, PP, SD, and WM.
How is batch management configured?
We need to define the batch level in logistics general →Batch management →Specify batch level and activate batch status management We have options of batch at Material and plant level Material level and Client level Material and plant level Here the same material can have a same batch number for different plants but with different specification (like different viscosity, exp date etc)
Material level Here the unique material number will have a unique batch number and the same specifications for all plants Client level Here the unique material number will have unique batch number and same specifications across the client. Here one batch number can be assigned only once in the client.Activate internal batch number assignment Maintain number range for internal batch number assignment Maintain number range for external batch number assignment Define batch creation for goods movement (automatic batch creation for movement type example movement type 101 at goods receipt)
How is batch created manually and automatically?
Batch is created manually using Tcode MSC1N For automatic creation of batch number at the time of goods receipt, configuration must be done for automatic creation of batches at the time of GR and now once we post GR system will automatically create batch at the time of GR.
How to handle free items in PO?
When creating a PO, we can mark the item as a free item in the PO’s item overview section. For free marked items, the price will be zero.
What information is maintained in Accounting View of material master?
Accounting view is a plant specific view. It includes important information such as valuation class and price control, among other things. The valuation class aids in determining the appropriate GL account for account posting. It is also used in the configuration of OBYC settings. The price control indicator determines whether the material is kept at the standard price (S) or the moving average price (V).
What is the use of Material types?
Material Types’ aids in the maintenance of material master data for a specific material. We can control which views are required for a material type, which fields are required or optional, the material number range, and so on by using material types.
What is the use of ‘Partner Functions’ for a vendor?
Partner Function is used to define the responsibilities and duties of business partners. Some partner functions are OA (Ordering Address), GS (Goods supplier), PI (Invoice presented by), AZ (Alternate payee), CR (Carrier), etc.
What is the use of ‘Material Status’?
Material Status is useful in determining a material’s usability. It is a two-digit code that can be used to keep track of plant-specific material status, cross-plant material status, and distribution material status.
What is the ‘Price Control Indicator’?
‘Price Control Indicator’ is maintained in accounting view and is used to determine how a material will be evaluated. It can be Standard Price (S) or Moving Average Price (V). When the indicator is set to S, all inventory postings are made at the standard price stored in the material master. If there are variances in any transaction due to different prices, the variance is posted in the price difference account. If the 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 the weighted average formula. If a price that differs from the moving average price is used to post goods movements or invoice receipts, the difference is posted to the stock account.
What are various types of Stock transfer?
Stock transfer refers to the physical movement of stock between different physical locations. Stock transfer can be accomplished in a single or two-step process. Among the various stock transfers are: Inter-organizational (Plant to Plant of different company codes) Within a company (Plant to Plant within same company) Within the Plant (Storage location to Storage location)
What is the difference between stock transfer between plants with the same company code and stock transfer between plants with different company codes?
- In case of stock transfer between two plants (assuming valuation is at plant level) belonging to same company code one material document and one accounting document is created.
- In case of stock transfer between two plants belonging to different company codes one material document and two accounting documents are created.
The other differences are as below.
Intracompany STO->Purchase order type is UB->Delivery type is NL(Material is issued from supplying plant using movement type 641)
Intercompany STO->Purchase order type is NB->Delivery type is NLCC
Material is issued from supplying plant using movement type 643 50. What are various Stock Types?
The following stock types are frequently used in SAP:
- 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)
Here are a below couple more articles to help you improve your knowledge.
