SAP MM Interview Questions and Answers for experienced

1. What is SAP MM?

   • Answer: SAP MM (Materials Management) is a module within the SAP ERP system responsible for managing the procurement and inventory of materials throughout an organization. It encompasses all aspects from purchasing and inventory control to vendor management and warehouse processes.

2. Explain the different procurement processes in SAP MM.

   • Answer: SAP MM supports various procurement processes, including: Standard Purchase Order, RFQ (Request for Quotation), Auction, Scheduling Agreement, Contract, Stock Transfer, and Third-Party Procurement. Each process caters to specific procurement needs and complexities.

3. What are the key master data objects in SAP MM?

   • Answer: Key master data objects include Material Master, Vendor Master, Purchase Info Record, and Purchasing Organization.

4. Describe the Material Master and its various views.

   • Answer: The Material Master contains all relevant information about a material. Views include: General Data, Purchasing Data, MRP 1, MRP 2, Sales Org. Data 1, and Plant Data. Each view contains plant-specific or company-code-specific data related to the material's use, procurement, and costing.

5. What is a Purchase Info Record (PIR)?

   • Answer: A PIR stores data about vendors for a specific material and plant. It includes vendor-specific information like source list, price, lead time, payment terms, and other relevant details used during purchase order creation.

6. Explain the concept of a Source List.

   • Answer: A source list defines the potential vendors for a material at a specific plant. It provides a prioritized list of vendors, influencing the system's selection of vendors when creating purchase orders automatically.

7. What is a Purchase Order (PO)? How is it created?

   • Answer: A PO is a legally binding document issued to a vendor to request goods or services. It is created using transaction ME21N, often based on a requisition (ME51N) or directly via the system's suggested sourcing based on PIRs and source lists.

8. What are the different PO types in SAP MM?

   • Answer: Various PO types cater to different procurement scenarios, including standard POs (NB), subcontracting POs (NB), and service POs (ND). Each type has specific settings and functionalities.

9. Explain the process of goods receipt (MIGO).

   • Answer: Goods receipt (MIGO) is the process of recording the physical receipt of materials into the warehouse. It updates inventory levels and triggers accounting postings. Different goods receipt types exist based on the procurement process.

10. What is invoice verification (MIRO)?

    • Answer: Invoice verification (MIRO) is the process of matching the vendor invoice with the purchase order and goods receipt. This ensures that the correct amount is paid to the vendor.

11. Explain the concept of three-way match in SAP MM.

    • Answer: Three-way match verifies that the purchase order, goods receipt, and vendor invoice quantities and values match before invoice posting. This minimizes payment errors.

12. What is a scheduling agreement?

    • Answer: A scheduling agreement is a long-term contract with a vendor for regular deliveries of materials. It outlines delivery schedules and quantities but does not create immediate purchase orders. Releases are created from the scheduling agreement to generate purchase orders.

13. What is a contract in SAP MM?

    • Answer: A contract is a long-term agreement that defines pricing and other conditions for future purchases. It acts as a framework for creating purchase orders, ensuring consistent pricing and terms.

14. Describe the role of a purchasing organization in SAP MM.

    • Answer: The purchasing organization is responsible for planning and executing procurement activities. It defines the rules and policies governing purchasing within a specific region or division.

15. What is a purchasing group?

    • Answer: A purchasing group is a team of buyers responsible for procuring specific materials or working with certain vendors.

16. Explain the concept of valuation in the material master.

    • Answer: Material valuation determines how the material's cost is calculated. Methods include standard price, moving average price, and FIFO (First-In, First-Out).

17. What are the different inventory management methods in SAP MM?

    • Answer: Methods include FIFO, LIFO (Last-In, First-Out), moving average, and standard cost.

18. What is a stock transfer?

    • Answer: A stock transfer moves materials between different storage locations or plants within the same company. It doesn't involve external vendors.

19. What are the different types of requisitions in SAP MM?

    • Answer: Requisitions can be created manually or automatically and can be used for both internal and external procurement.

20. Explain the role of MRP (Material Requirements Planning) in SAP MM.

    • Answer: MRP determines the required quantities of materials and creates planned orders to ensure sufficient stock for production or other needs.

21. What are the different types of purchase requisitions?

    • Answer: Types include standard requisitions, scheduling agreement releases, and stock transfer requisitions, each serving different procurement needs.

22. What is a vendor master? Explain its various views.

    • Answer: The vendor master contains all relevant data about a vendor. Key views include General Data, Company Code Data, Purchasing Organization Data, and Payment Terms.

23. Explain the process of creating a vendor master record.

    • Answer: The process involves entering data across multiple views, ensuring data consistency and accuracy across all relevant organizational units.

24. How do you manage vendor performance in SAP MM?

    • Answer: Vendor performance can be managed by tracking key performance indicators (KPIs), conducting performance reviews, and implementing vendor rating systems.

25. What is a return to vendor (RTV)?

    • Answer: RTV is the process of returning defective or unwanted materials to the vendor.

26. Explain the process of creating a return to vendor in SAP MM.

    • Answer: The process involves creating a return material authorization (RMA), processing the return, and managing the credit memo.

27. What are the different types of pricing procedures in SAP MM?

    • Answer: Pricing procedures define the rules for calculating the price of materials in purchase orders. Different procedures handle various pricing scenarios.

28. What is a condition record?

    • Answer: A condition record stores pricing, discounts, and other conditions relevant to a specific material, vendor, or customer.

29. How do you manage inventory discrepancies in SAP MM?

    • Answer: Discrepancies are managed through physical inventory counts, stock adjustments, and root cause analysis to identify and correct errors.

30. What is the role of the purchasing information record (PIR)?

    • Answer: The PIR maintains relevant information about a vendor for a specific material, acting as a source of data during purchase order creation.

31. Explain the concept of consignment inventory in SAP MM.

    • Answer: Consignment inventory is owned by the vendor but stored at the buyer's facility. Ownership transfers only when the material is used.

32. What are the different types of reports available in SAP MM?

    • Answer: Various reports provide insights into procurement, inventory, and vendor performance. Examples include stock reports, purchase order reports, and vendor performance reports.

33. How do you handle rejected goods in SAP MM?

    • Answer: Rejected goods are handled through returns, credit memos, and potentially replacement orders.

34. What are the key performance indicators (KPIs) used in SAP MM?

    • Answer: KPIs include inventory turnover rate, purchase order cycle time, vendor on-time delivery rate, and cost of goods sold.

35. Explain the integration between SAP MM and other SAP modules.

    • Answer: SAP MM integrates with modules like PP (Production Planning), SD (Sales and Distribution), FI (Financial Accounting), and CO (Controlling) to facilitate seamless data flow and business processes.

36. What are the best practices for optimizing the SAP MM module?

    • Answer: Best practices include streamlining procurement processes, automating tasks, maintaining accurate master data, and using advanced analytics to optimize inventory levels and procurement costs.

37. How do you handle changes in purchase orders?

    • Answer: Changes are managed through change documents and approvals, ensuring proper communication and control.

38. What are the security considerations in SAP MM?

    • Answer: Security involves restricting access to sensitive data, implementing authorization controls, and adhering to organizational security policies.

39. Explain the role of the plant in SAP MM.

    • Answer: The plant represents a physical location where materials are stored and processed.

40. What is a storage location?

    • Answer: A storage location is a sub-unit within a plant, providing a more detailed inventory management structure.

41. Explain the concept of batch management in SAP MM.

    • Answer: Batch management tracks materials based on batch numbers, allowing for better traceability and quality control.

42. What is the role of the purchasing organization in the procurement process?

    • Answer: The purchasing organization defines the legal and organizational framework for procurement activities.

43. Explain the process of creating a purchase requisition.

    • Answer: A purchase requisition is initiated based on material requirements, which can be manual or automated.

44. What are the different types of pricing conditions in SAP MM?

    • Answer: Pricing conditions include net price, discounts, surcharges, and taxes.

45. How do you manage price changes in SAP MM?

    • Answer: Price changes are managed through condition records and updates to master data.

46. What is the role of the material master in the procurement process?

    • Answer: The material master provides all relevant data about a material required for procurement activities.

47. Explain the process of goods issue in SAP MM.

    • Answer: Goods issue is the process of recording the removal of materials from inventory.

48. What are the different types of inventory transactions in SAP MM?

    • Answer: Inventory transactions include goods receipts, goods issues, stock transfers, and adjustments.

49. Explain the concept of physical inventory in SAP MM.

    • Answer: Physical inventory is a periodic count of materials to reconcile with the system's inventory records.

50. What is the role of the movement type in SAP MM?

    • Answer: The movement type defines the type of inventory transaction.

51. Explain the process of creating a vendor invoice in SAP MM.

    • Answer: Vendor invoices are created based on the purchase order and goods receipt data.

52. What are the different payment methods in SAP MM?

    • Answer: Payment methods include check, wire transfer, and electronic funds transfer.

53. Explain the process of managing payment terms in SAP MM.

    • Answer: Payment terms are defined in the vendor master and purchase order.

54. What is the role of the account assignment in SAP MM?

    • Answer: Account assignment links the material cost to specific cost centers or projects.

55. Explain the concept of service procurement in SAP MM.

    • Answer: Service procurement involves procuring services rather than physical materials.

56. What are the different types of procurement processes in SAP MM?

    • Answer: Processes include standard purchase orders, scheduling agreements, contracts, and sub-contracting.

57. Explain the process of creating a purchase order in SAP MM.

    • Answer: Purchase orders are created based on purchase requisitions or directly.

58. What are the different approval workflows in SAP MM?

    • Answer: Approval workflows automate the approval process for purchase orders and other documents.

59. Explain the concept of outsourcing in SAP MM.

    • Answer: Outsourcing involves procuring goods or services from external vendors.

60. What are the different types of reports available in SAP MM?

    • Answer: Reports provide insights into various aspects of procurement and inventory.

61. Explain the process of creating a stock transfer order in SAP MM.

    • Answer: Stock transfer orders move materials between storage locations within the same company.

62. What are the different types of inventory valuation methods in SAP MM?

    • Answer: Inventory valuation methods include standard cost, moving average, and FIFO.

63. Explain the process of creating a purchase info record in SAP MM.

    • Answer: Purchase info records store vendor-specific data for a material.

64. What are the different types of purchasing documents in SAP MM?

    • Answer: Purchasing documents include purchase orders, scheduling agreements, and contracts.

65. Explain the concept of vendor evaluation in SAP MM.

    • Answer: Vendor evaluation assesses vendor performance based on various criteria.

66. What are the different types of material types in SAP MM?

    • Answer: Material types define how a material is managed in the system.

67. Explain the process of creating a material master in SAP MM.

    • Answer: Material master records contain all relevant data about a material.

68. What are the different types of account assignments in SAP MM?

    • Answer: Account assignments link material costs to specific cost centers or projects.

69. Explain the concept of invoice verification in SAP MM.

    • Answer: Invoice verification matches the vendor invoice with the purchase order and goods receipt.

70. What are the different types of payment terms in SAP MM?

    • Answer: Payment terms define the payment conditions for vendor invoices.

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