SAP MM Interview Questions and Answers by B G Basetty & Rajendra G

ENTERPRISE STRUCTURE

1. What is meant by a Client in the SAP R/3 system?

A: Client is a commercial organizational unit within the R/3 system with its own
data, master records & set of tables. From the business perspective client forms
the corporate group.

2. Define plant?

A: An operating unit for production and MRP or simply a grouping of one or several
locations with stocks of material (storage locations) those are geographically close
to one another.

3. Define purchase organization?

A: Organizational unit which procures materials and services and agrees on terms
and conditions of purchase with vendors.

4. How many plants can a purchase organization service?

A: Multiple plants

5. Are purchasing groups actually assigned to purchasing organization?

A: No. A purchasing group is assigned to a material at the plant level.

6. Can several companies use the same chart of accounts?

A: Yes.

7. At what level is the standard chart of accounts defined?

A: Client.

8. What is business area?

A: A special economic unit for which an internal balance sheet and P&L statement
can be created. A business area is defined independently of company code. You
specify how you wish business area for each sales area to be determined – either
by plant and division or by sales area.

9. At what level is the warehouse management system defined?

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SAP MM Interview Questions and Answers by B G Basetty & Rajendra G

A: Storage location level.

10. Can storage locations in different plants be managed under one warehouse
number?

A: Yes.

11. At what level of the organization is valuation carried out?

A: Either Plant or Company code.

12. What do you mean by standard purchase organization & reference purchase
organization? Please mention the SPRO navigation for both the purchase
organizations?

A: If several purchase organizations procures material for a plant then you can define
one of them as Standard purchase organization for the transaction “Pipeline
procurement”, “consignment” & “stock transfers”.
Reference purchase organization is the purchase organization whose conditions or
contracts may be access and use by the other purchase organization linked to it.
SPRO Navigation to Define & Assign Standard Purchase Organization:

IMG → Enterprise structure → Definition → Materials Management →

Maintain Purchase Organization

IMG → Enterprise structure → Assignment → Materials Management →

Assign Standard Purchase Organization to plant.

SPRO Navigation to Define & Assign Reference Purchase Organization:

IMG → Enterprise structure → Definition → Materials Management →

Maintain Purchase Organization

IMG → Enterprise structure → Assignment → Materials Management →

Assign Purchase Organization to Reference Purchase Organization.

13. What are the maximum purchase organizations you can have for an
enterprise? Justify your answer?

A: Enterprise wide purchase org: One purchasing organization procures for all the
company codes of a client.
Company specific purchase org: One purchasing organization procures for one
company code.
Plant specific purchase org: One purchasing organization procures for one plant.
Reference purchasing organization.
Standard purchasing organization.

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SAP MM Interview Questions and Answers by B G Basetty & Rajendra G

14. Where do you define and assign storage locations in the enterprise structure?
Mention the SPRO navigation?

A: At plant level the storage locations are defined.

The SPRO Navigation to Define & Assign Storage Locations:
IMG → Enterprise structure → Definition → Materials Management →
Maintain Storage locations. (At this stage of definition only the system ask for
the plant to assign the storage location. So there is no separate navigation to
assign storage locations to plant)

15. Where do you define purchasing group?

A: The purchasing groups are defined in the IMG activity.

The SPRO Navigation to Create Purchasing Groups:
IMG→ Materials Management → Purchasing → Create Purchasing Groups

16. What is reference purchase organization? Where do you use it?

A: Reference purchase organization is the purchase organization whose conditions or

contracts may be access and use by the other purchase organization linked to it.

17. What is the relevance of controlling area in an enterprise structure?

A: Controlling area is an organizational unit within a company used to represent a

closed system for cost accounting purpose.
A controlling area may include single or multiple company codes that may use
different currencies.

18. Can a purchasing organization be assigned to more than one company code?
Can a purchasing organization service more than one company code? How is
this possible?

A: A purchasing organization can only be assigned to one company code. However if

you would like to have a purchasing organization service more than one company
code, you simply do not assign the purchasing organization to company code.
That way any plant assigned to that purchasing organization, regardless of which
company code the plant belongs to, can create documents for that purchasing
organization.

19. Can a plant function in SAP without a factory calendar assigned to it?
Explain?

A: No. the factory calendar provides a holiday calendar, which days are workdays,
and company holidays. This is all used for planning purposes.

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SAP MM Interview Questions and Answers by B G Basetty & Rajendra G

20. What is MM enterprise structure? Explain using a simple diagram?

A:

Company Code: Legal entity from which financial statements are generated.
Purchasing Organization: An organizational unit responsible for procuring
materials and services and agrees on terms and conditions of purchase with
vendors negotiating terms for purchases, incoterms, pricing, payment terms, etc.
Purchase group: Group of employees responsible for executing the purchasing
activities for certain products and plants.
Plant: An operating unit for production and MRP or simply a grouping of one or
several locations with stocks of material (storage locations) those are
geographically close to one another. Plant can be manufacturing facilities,
distribution centers or warehouses.
Storage location: A subdivision of a plant where materials are stored.

21. If PP (production planning) is used in the SAP system, at what level of the
organization structure is the valuation level?

A: At the Plant level.

22. What is the relevance of controlling area in an enterprise structure?

A: The controlling area is the business unit where cost accounting is carried out.
Usually there is a 1:1 relationship between the controlling area and company
code. For the purpose of company wide cost accounting one controlling area can
handle cost accounting for several company codes in one enterprise.

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SAP MM Interview Questions and Answers by B G Basetty & Rajendra G

23. Explain the concept of cost center? Mention the steps involved in creating a
cost center?

A: An organizational unit within a controlling area that represents a defined location

of cost incurrence.
The definition can be based on:
 Functional requirements
 Allocation criteria
 Physical location
 Responsibility for costs
Steps involved in creating a cost center:
1. Maintain controlling area: IMG → Controlling → General Controlling →
Organization → Maintain Controlling Area.
2. Define Cost Center Categories: IMG → Controlling → Cost Center
Accounting → Master Data → Cost Centers → Define Cost Center
Categories.
3. Define Standard Hierarchy: IMG → Controlling → Cost Center
Accounting → Master Data → Cost Centers → Define Standard
Hierarchy.
4. Create Cost Centers: IMG → Controlling → Cost Center Accounting →
Master Data → Cost Centers → Create Cost Centers.

Note: First three steps mentioned above are the prerequisites to create cost
centers.

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