SAP MM Interview Questions

SAP MM NOTES

Purchase order Type

It is a formal document given to vendors containing terms and conditions for procuring material and services

Procurement Types

1.Subcontracting PO

2.Consignment PO

3.Stock Transfer PO

4.Service PO

In Sub Contracting, the vendor receives components or materials with the help of which it produces a product.

Tcode : ME21N     Category  L

In Consignment PO the material is available at the organisation store however its ownership still belongs to the vendor/supplier. If you utilize the material from the consignment stock then you have to pay.

T Code : ME21N   category : K

Stock Transfer PO- goods are procured and supplied within the company. From one plant to another plant

TCode : ME21N  category U

 

Service PO – A third party provides services to a company. E.G – Housekeeping, maintenance of machineries, electricity supply etc.

T Code : ME21N   Category : D

 

INVENTORY MANAGEMENT

Inventory Management deals with stock of goods or materials. It deals with placing and handling the stock received from the vendor in correct place with the company’s premises ( Store or Warehouse)

101 – Goods receipt from Purchase order

103 – Goods receipt for PO into GR block stock

210 – Goods issue for cost center

301 – Transfer posting plant to plant in one step

305 - Transfer posting plant to plant in two steps – placement in storage

311 – Transfer posting storage location to storage location in one step

313 – Stock transfer  to storage locations to storage location in two steps - removal from storage

Path : Logistics > MM > Inventory Management > Goods Movement > Goods Movement

TCode : MIGO

Cancellation of Goods Receipt

Path : Logistics > MM > Inventory Management > Goods Movement > Goods Movement

TCode : MIGO

 

RESERVATION

When stocks or material or goods are to be blocked in advance so that they can be made available or used for production at a particular point of time

Path : Logistics > MM> Inventory Management > Reservation > Create

T Code : MB21

GOODS ISSUE

It means goods are taken/ withdrawn for production, sampling or returned back to the vendor. It leads to decrease in quantity of stock.

Path : Logistics > MM> Inventory Management > Goods Movement > Goods Movement (MIGO)

T Code : MIGO

 

INVOICE VERIFICATION

The amount to be paid along with the details of the material is provided by the vendor and the company will have to verify the invoice. This process of verifying the invoice and making the payment is known as Invoice Verification.

Path : Logistics > MM > Logistics Invoice Verification > Document Entry > Enter Invoice

Tcode : MIRO

If you want to Block the invoice

Path : Logistics > MM > Logistics Invoice Verification > Further Processing > Release Blocked Invoice

T Code : MRBR

ERS – Evaluated Receipt Settlement

It is a easy  method of settling goods receipt automatically. If the company (ordering party) agrees with the vendor on all the financial terms and conditions, then the invoice need not to be verified. In that case the invoice will be posted automatically from the information present in the PO and the goods receipt.

MM vendor – XK02 > Control Tab >You have to select  AutoEvalGrSetmt Del

Path : Logistics > MM > Logistics Invoice Verification > Automatic Settlement > Evaluated Receipt Settlement (ERS)

Tcode : MRRL

 

SERVICE MANAGEMENT

 

When a company apart from purchasing goods may also require services like maintenance, painting, housekeeping, pantry services etc. These services are carried out by contractors or vendors. This process is known as Service Management.

Service related description along with unit of measure is stored/ recorded / entered in master data record which is known as Service Master Record

 

There are 2 types of services

Planned Services – In planned services, at the time of purchasing the service the specification like the quantity and price are known.

Unplanned Services - In unplanned services, at the time of purchasing the service the specification like the quantity and price are not known.

Path : Logistics > MM > Service Master > Service > Service Master

Tcode : AC03

 

Service PO – A third party provides services to a company. E.G – Housekeeping, maintenance of machineries, electricity supply etc.

Path : Logistics > MM > Purchasing > Purchase Order > Create > Vendor / Supplying Plant Known

T Code : ME21N   Category : D

Service Entry Sheet

Path : Logistics > MM > Service Entry Sheet > Maintain

T Code : ML81N

 

VALUATION

Material Valuation helps in determining the price of the material and it needs to be posted in the General Ledger

Split Valuation

Same material / service can be procured from different vendor at different price. This is known as split valuation.

Path : IMG > MM > Valuation and Account Assignment > Split Valuation > Activate Split Valuation

T Code : OMW0

 

SAP MM Interview Questions

  

 Q: What do you know about SAP?

A: SAP is an enterprise resource planning software that was produced by a German corporation. It was basically designed to manage resources, information, and activities that are required to complete business processes such as procurement and managing orders, billing of orders, and management of human resources.

Q: What are the organizational levels in SAP R/3?

A: The top level of the organizational structure is the client, followed by company code, which represents a unit with its own accounting unit. The next level down is plant where procurement activities take place. A plant produces goods and makes goods available for the company. The purchasing organization is legally responsible for the procurement transactions. This group is further subdivided into purchasing groups.

Q: What are the important steps in the procurement life cycle?

A: Procurement starts with gathering requirements, then creating a purchase requisition, followed by creating a purchase order that has to be sent to the vendor. After this, goods will be supplied by the vendor and goods receipt is done along with invoice verification. Then the vendor is paid for the supplied goods and services.

Q: What do you mean by special stocks?

A: Special stocks are stocks that are managed differently, as these stocks do not belong to the company and these are being kept at some particular location.

Q: How stock is being transferred from one plant to another plant?

A: 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.

Q: What are some of the movement types for stock transport order?

A: 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.

  

Q: What is the difference between purchase requisition and purchase order?

A: Purchase requisition is an internal document; it is a request that is made to the purchasing organization to procure a certain list of material. Purchase order is a formal document that is given to the vendor containing the list of items to be procured from the vendor.

Q: What is a RFQ and how is it different from quotation?

A: RFQ is a request for quotation and it is a form of invitation that is sent to the vendors to submit quotations indicating their pricing and terms and conditions, while quotation is a reply by a vendor in response to the request for quotation.

Q: What are the transactions that cause change in stock?

A: Goods receipt and goods issue will cause change in stock, as goods receipt will increase the warehouse stock and goods issue will decrease the warehouse stock.

Q: What do you mean by reservation?

A: Sometimes, a stock has to be blocked in advance so that it can be made available at a particular point of time. This is known as reservation. Reservation ensures availability of stock and it can be used when required. Reserved quantity can be viewed by tcode MMBE.

Q: Can you manually create a purchase requisition with reference to documents such as purchase order or scheduling agreement?

A: No, purchase requisition cannot be created with either of these, as it is an internal document which is controlled by the purchase organization.

Q: Is material and vendor data available at all organizational levels?

A: Yes, material and vendor data is available at all levels, as it is normally created for company and it is valid for the levels below company.

Q: What do you mean by release procedure?

A: Release procedure means approval of documents like purchase orders and purchase requisition manually by the criteria defined in the configuration.

Q: If you have multiple line items in a purchase order, can you release that purchase order line by line?

A: No, release is done only at the header level in a combined way for all the line items in case of purchase order.

Q: What do you mean by material type?

A: Materials with some common attributes are grouped together and they are assigned to a material type. This will differentiate materials and allow an organization to manage different materials in a systematic manner in accordance to the company’s requirement.

Q: What is a source list?

A: Source list includes a list of possible sources of supply for a material over a given framework of time. A particular material can be ordered from different vendors in different time intervals. This information can be maintained in a source list.

Q: What do you mean by consignment stock?

A: In consignment, material is available at the company’s premises, however it still belongs to the vendor (seller)/Owner of the material. If we utilize the material from consignment stocks, then we have to pay to the vendor.

Q: What is invoice verification?

A: Once goods are procured from the vendor and placed in company’s premises through goods receipt, we need to pay to the vendor for the acquired goods and services. The amount to be paid along with the details of material is provided by the vendor in the form of an invoice. Before paying to the vendor, we need to verify the invoice. This process of verifying the invoice and paying to the vendor is known as invoice verification.

Q: What do you mean by outline agreement?

A: Outline agreement is a long-term purchasing agreement with the vendor containing the terms and conditions regarding the material that is supplied by the vendor. Outline agreement is valid up to a certain period of time and covers a certain predefined quantity or value.

Q: What is the difference between contract and scheduling agreement?

A: Contract is a long-term outline agreement between the vendor and the ordering party over a predefined material or services over a certain framework of time. Scheduling agreement is a long-term outline agreement between the vendor and the ordering party over a predefined material or service, which are procured on predetermined dates over a framework of time.

 Q: What is the difference between planned and unplanned services?

A: In planned services, at the time of procurement, specifications like quantity and price are known. It means the nature and scope of service is clear before the procurement, whereas in unplanned services, specifications like quantity and price are not known at the time of procurement. It means the nature and scope of service is not clear before the procurement. These services can be extended as per requirement.

Q: What is quota arrangement?

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

Q: What do you understand by posting period?

A: Documents such as purchase order, request for quotation, goods receipt are essential in a business. These documents need security, i.e., if any of these documents is posted incorrectly, then the business can get affected at various levels. In order to secure these documents, we have a concept of posting period. Posting period allows us to post and make changes in the documents only in a specific time period.