Top SAP Materials Management (MM) Interview Questions and Answers-(2024)

1 .

SAP MM (Materials Management) is a module in SAP ERP Central Component (ECC) that provides companies with materials, inventory and warehouse management capabilities.

The primary goal of SAP MM is to make sure that materials are always kept in proper quantities and without shortages or gaps in the organization's supply chain. It also helps supply chain professionals and other SAP users complete the purchasing of goods in a timely and cost-effective way and to be able to deal with day-to-day changes in these processes.

One of the critical modules in SAP ECC, SAP MM is part of SAP ECC's logistics function and plays a vital role in a manufacturer's supply chain. It integrates with other ECC components like Production Planning (PP), Sales and Distribution (SD), Plant Maintenance (PM), Quality Management (QM), Finance and Controlling (FICO) and Human Capital Management (HCM).

2 .

What are the Benefits of SAP MM?

With changing customer demands and expectations, the efficiency of an organisation relates to its ability to cater to market demands in the shortest time possible. To ensure a seamless delivery of products, the business is required to maintain the right stock at the right time. Having an efficient material management process helps prevent supply gaps and shortages of inventory and raw materials and improve the supply chain's efficiency. SAP MM automates material management and procurement activities, making the entire process more competent. Here are some of the top benefits of SAP MM :

* enhances overall inventory management

* minimises and eliminates inventory losses

* reduces the time and labour spent on maintaining inventory

* decreases material wastage by avoiding stocking on obsolete or unnecessary products

* lowers labour costs and optimises labour employment

* minimises manufacturing cycle times

* reduces expenditure on storing unwanted materials

* improves product delivery time

* increases the transparency of inventory management

3 .

What are the SAP MM submodules?

SAP MM's functions include material management, procurement process management, master data management (material and vendor master), inventory management, material requirements planning and invoice verification.

All of these MM submodules have functions that perform specific business processes for those modules. These are executed through transactions, the method that SAP ECC uses to complete business processes. MM also supports other logistics functions that require materials information, such as plant maintenance and project management.

4 .

What are the Components of SAP MM?

The SAP MM system consists of several components integrated with each other. This integration makes it easy for each department to share information with other departments, thereby updating data in real-time. SAP MM separates into five key components, with each of these components containing several sub-modules. Here are five of the major components of the SAP MM software suite:

1. MM - CBP (Consumption-Based Planning) : Consumption-based planning uses past consumption values to forecast future requirements using statistical procedures. The primary role of the MM-CBP component is to monitor stocks and automatically create procurement proposals for production and purchasing. The proposal triggers when stock levels go below a pre-defined reorder point or by forecasting requirements using past consumption values.

2. MM - PUR (Purchasing) : The purchasing component ensures seamless communication among all participants in the procurement process, thereby ensuring that the purchasing unit of an organisation functions smoothly. The primary tasks of the purchasing element are:

* handling external procurement of materials and services

* monitoring deliveries from vendors

* tracking payments to vendors

* determining possible sources of supply for a requirement

3. MM - SRV (External Services Management) : This component supports bid invitations, order/award placements, acceptance of services and invoice verification. It provides a platform for managing and coordinating external services. It supports two types of external services :

* planned services where the nature and scope of requirement is known at the start of the procurement phase

* unplanned services where the scope of requirement is unavailable and procurement relies on a value limit

4. MM - IV (Inventory Management) : This component deals with the following tasks:

* tracking and managing material (physical) stocks based on quantity and value

* maintaining the physical inventory of goods

* planning, entering and documenting the movement of all goods

5. MM - IV (Logistics Invoice Verification) : The logistics invoice verification is a process that comes at the end of the logistics supply chain. It includes tasks like purchasing, inventory management and invoice verification. This component helps in verifying incoming invoices based on prices, content and quantity. As soon as a vendor sends a purchasing invoice, this component adds it to the system, then passes it to financial accounting and other elements in materials management.

5 .

Explain Types of procurements in SAP MM.

Let's take a look at the two types of procurements in the SAP MM module :

1. Basic procurement : The procedure of buying suitable materials and services in the right quantities at the right time at the lowest prices is basic procurement. The various steps in basic procurement include:

* Gathering information : The procurement process starts with collecting details about a product and quantity. Depending on the number of required products, the module contacts the appropriate suppliers.

* Contacting Suppliers : Depending on the demand, the selected suppliers fulfil the orders.

* Rating products and services : The materials management team rates products and services based on their performance. Depending on the product's rating, the team contacts the same suppliers for repeat orders or contacts new suppliers.

2. Special procurement : Products that do not belong to the company are special procurement. Some of the common types of special procurement and unique stocks include:

* Consignment stocks : These are materials that are available at the store premises. But to use them, the seller has to pay the vendor.

* Third-party processing : The seller passes the orders to the vendor who delivers the product directly to the customer.

* Pipeline handling : The vendor stocks the material at their premises, even after the seller places the order. Whenever a customer places an order, the seller gets the material from the vendor and delivers it to the customer.

6 .

How many types of stocks are there in SAP MM?

There are three types of stocks in SAP MM. The name of these stocks are :

Valuated Stock : Valuated stocks can be defined as those stocks that are valuated at the plant level.

Non-Valuated Stock : Non-valuated stocks are those stocks that are used for consumption in bulk and have low costs, such as screws, washers, pins, etc.

Special Stock : Special stocks are those stocks that are available but not owned by customers. Special stocks cannot be stored in a facility. Examples of such stocks include consignment, sales order, project stock, etc.

7 .

Name the types of stocks available in valuated stock.

The sub-types of stocks included in valuated stocks are :

Unrestricted Stock : Unrestricted stocks are those stocks that are ready for use and available at hand in the facility.

Quality Inspection Stock : Quality inspection stocks are those delivered materials that are retained to check or inspect the quality.

Blocked Stock : The materials that come under blocked stocks are those found to be of bad quality. The material is found to be of poor quality during production when some irregular functionalities get detected in the material.

8 .

Name the types of stocks available in special stock.

The sub-types of special stock includes :

* Subcontracting

* Consignment

* Stock Transport Order

* Third-Party Processing

* Returnable Transport Packaging

* Pipeline Handling

9 .

What do you understand by goods receipt and post goods receipt?

Goods Receipt : In SAP MM, goods receipt is the physical inbound transfer for goods or material into the warehouse. It specifies the transfer of goods used to post goods received from external vendors or in-plant production. All goods receipts result in an increase in stock in the warehouse.

Post-Goods Receipt : The Post Goods Receipt specifies the reference to the purchase order with which the goods were ordered. It is used to post the receipt of goods with reference orders after purchase. If the material is delivered for some purchase order, it is important for all departments involved that the goods receipt entry in the system references this purchase order.

10 .

What do you understand by Consignment Stock?

Consignment stocks are those stocks that are provided by vendors and kept in the company’s storage area. These stocks are available for use with the vendor still being the owner of it. The company can withdraw material from these stocks for use by paying for it to the vendor.

11 .

List out important field in purchasing view?

The critical fields in purchasing view are :

* Base unit of measure

* Order unit

* Purchasing group

* Material group

* Valid from

* Tax indicator for material

* Manufacturer part number

* Manufacturer, etc.

12 .

Explain the importance of the batch record?

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

13 .

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

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

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

14 .

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

* Purchase requisition > EKBN

* Purchase requisition account assignment > EBKN

* Release documentation > EKAB

* History of purchase documents > EKBE

15 .

What are the different info record types in SAP MM?

The different info record types in SAP MM are :

Standard : A standard info records are those records that consist of information on standard purchase orders.

Subcontracting : The information concerning subcontracting orders gets recorded in subcontracting info records.

Consignment : The information related to consignment stocks gets recorded in consignment info records. In this record, the company knows the materials available in the facility kept by the vendor.

Pipeline : The information regarding commodities supplied by vendors through pipes or pipelines gets recorded in pipeline info records. These include oil, water, or electricity.

16 .

What are the different steps used in Procurement Lifecycle?

Following are the different steps used in Procurement Lifecycle :

Requirement and Information Gathering : The procurement process begins with gathering information about a product and its quantity first. Then for required products and services, it is necessary to look for suppliers who can satisfy the requirements.

Supplier Contact : This step comes after requirement and information gathering. After gathering requirements, one will look for the suppliers who can fulfill the requirements. Based on that, we can make a quotation request or information request to the suppliers or direct contact with them.

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

Negotiation : Some negotiations with suppliers are made regarding the products/services' price, availability, and delivery schedule of the products/services. In this step, a contract is signed, a binding legal document between the supplier and the 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 the supplier is paid accordingly. Training and Installation of products 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.

17 .

What do you understand by a Purchase Order?

A Purchase Order is a type of confirmation list that a buyer sends to his sender to confirm the requirements finally. The Purchase Order not only includes the names and quantity of materials, but it also has valuable information like details of purchasing company with a company code, name of material along with the corresponding Plant, and date for delivery of material.

18 .

What transaction code is used to delete a batch in SAP MM?

In SAP MM, the transaction code MSC2N is used to delete a batch. There is an alternate way to delete a batch record which we can do by flagging the batch master record.

19 .

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.

20 .

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.

21 .

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.

22 .

Can you elaborate on SAP and how it is useful in Industries?

SAP stands for Systems, Applications, and Processing the Data. It is the most popular software application used to provide enterprise business solutions. This ERP software application was first introduced in Germany (Mannheim) in the year 1972. ERP stands for Enterprise Resource Planning.

It provides solutions by incorporating various business tasks like sales, purchase, and production. SAP obtains details from one business process and integrates them into another business process, thus speeding up the business process.

It is broadly used in industries since it updates and processess important data very quickly and is used by the department to determine how to prepare the products and also it can program business process and provide real-time solutions for business.

23 .

What is the use of document type in the SAP system?

In the SAP system, the document type indicates different procedures for a transaction within the system.

24 .

What is known as RFQ?

RFQ is an abbreviation for Request For Quotation. It is a kind of a form that is given to the vendors for them to submit any quotation which is indicative of the terms and conditions and the price of the goods and materials. It has details of the quantity of the goods, information about the goods, the delivery date of when the form is to be submitted.

25 .

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

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

You can also use transaction code M21N for this purpose

26 .

What is the full form of ERS in the context of SAP MM?

In SAP MM, ERS stands for Evaluated Receipts Settlement. It refers to the process of settling down receipts of the goods automatically. In the ERS process, an agreement between the vendor and the user that vendors do not prepare an invoice for the goods ordered. Rather, the system would automatically generate and post the invoice document based on the purchase order and goods receipts.

27 .

What are the pre-requisites for creating a purchasing info record in SAP MM?

Following is the list of pre-requisites used for creating a purchasing info record in SAP MM :

* Material Number

* MPN ( Manufacturer Part Number )

* Vendor Number

* Organizational level code

28 .

How can you change the standard price in the SAP master material?

There is no way to update or change the standard price for the material data directly. However, we can perform the following steps to change the standard price:

* Fill in the future fields price (MBEW-ZKPRS) and the materials' effective data (MBEW-ZKDAT).

* Select Logistics > Material Management > Valuation > Valuation Price Determination > Future Price.

29 .

Explain what is Material Requirement Planning (MRP)?

In SAP ERP (Enterprise Resource Planning), Material Requirement Planning (MRP) is a planning tool that helps procurement and production planners to create practical and realistic plans. Once the planners create a plan, the initiation of production and procurement plans gets formulated.

30 .

Define Consumption-Based Planning (CBP)?

Consumption-Based Planning (CBP) is planning that uses the history of consumption values. By using consumption values, requirements are forecasted. Consumption-Based Planning (CBP) gets activated once the stock level plunges below a fixed reorder point or forecast requirements are assessed based on the history of consumption values.

31 .

What is your understanding about the Master Production Schedule (MPS)?

Master Production Schedule or MSP can be defined as a plan laid out by a company for the production, staffing, inventory, etc., for individual final articles. In this scheduling, the company plans which product and its related quantities get produced during a period. Usually, this period spans between 3-18 months. The data used as an input in the Master Production Schedule include forecast demand, production costs, inventory cost, etc.

32 .

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.

33 .

What is a Contract in SAP MM?

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.

34 .

What is the storage location in SAP MM?

In SAP MM, a storage location is where we can store our stock of goods within the premises of a plant. Each plant has at least one storage location assigned to it.

35 .

What is the planned delivery and GR processing time?

Planned delivery : The meaning of planned delivery is the number of business days in which the person is expected to receive the materials and goods.

GR processing : The GR processing time is the number of business days in which the person has to inspect and place the material in the storage, after obtaining the goods and materials.

36 .

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.

37 .

What is the difference between the terms MRP and CBP?

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

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

38 .

What do you understand MIRO and MIGO?

MIRO stands for Movement In Receipt Out. MIRO handles the invoice verification activities of the bills raised from the dealer’s end.

MIGO stands for Movement In Goods Out. MIGO is used for the goods that are moved from one plant level to another plant level, goods receipt, transfer from one storage location to another storage location, etc. The logistics department uses the term MIGO.

39 .

What do you understand RFI and RFP?

RFI stands for Request for Information. RFI is used in the business processes where written information is assembled concerning the competencies of sellers.

RFP stands for Request for Proposal. RFP is sent by companies to potential sellers asking for business proposals.

40 .

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.

41 .

What is the use of the Confirmation Control Key (CCK)?

The Confirmation Control Key or CCK is used to specify whether a notification for shipping is an expected purchase order item or not.

42 .

Can you include An Roh (raw Material) Type In the Sales View?

Usually, the raw materials cannot be included in the sales view. However, the raw materials can be included in the sales view only when they are sold to procure finished products in return.

43 .

What is NetWeaver?

NetWeaver is an incorporated technology in which every product in the MySAP group can be used in a single go of a server which is known as SAP Web Application Server. This technology is very useful and helps the user efficiently. One of the advantages of using this is that the data related to SAP can be accessed by the enterprise through or even through mobile. This is not only cost effective but also time effective. If one uses this a lot of money is saved which could otherwise go in training a new user in the SAPclient.

44 .

Why does the Invoices get blocked?

* Variance in the invoice item

* Amount of an invoice item

* Stochastic block

* Manual block

45 .

What Transaction Codes are used With Reservations?

* The MB21 transaction code : Creates a reservation.

* The MB22 transaction code : Changes a reservation.

* The MB23 transaction code : Displays a reservation.

* The MB25 transaction code : Displays lists of reservations.

46 .

What Is Lifo Valuation?

LIFO is a balance sheet valuation technique. It stands for last in-first out principle, i.e. the material added to the stock in last is valuated first. In this technique, the pricing of old material in stock is not affected by the pricing of new material. In this technique, a layer of stock increased or decreased is created for a fiscal year, on the basis of which the valuation is done.

47 .

What Is Movement Type?

While implementing the goods movement in an organization, the movement type is required to be entered. It is a three-digit identification key that is entered as per the movement type. The following are the common movement types that are used in SAP :

102 : Goods that are receipt against a purchase order

201 : Goods that are issued

321 : Goods released from quality inspection stock

48 .

What is a Batch Information Cockpit in SAP MM?

The Batch Information Cockpit (BIC) is the main switching point having a wide range of options for scrutiny and control. In SAP MM, the BIC stores all the information related to analyzing a particular batch at a single location.

49 .

What do you understand by the Lot Size in SAP MM?

In SAP MM, the Lot Size is the number of materials used for re-ordering. It can be static, periodic, optimum, or fixed in attributes.

50 .

What do you understand by master data?

Master Data is created centrally and is valid for almost all applications, and it remains constant over time, but we have to update it regularly. For example, the VendorVendor is a type of master data, and it is used for creating purchase orders.