2021

SAP MM INTERVIEW Q&A

ECC & S4 HANA

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 CONTENTS

1. Basics Questions & Answers Page-2 to 26

2. Advance Questions & Answers Page- 27 to 40

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Page 1 of 38
 BASICS QUESTIONS

1) What is the use of SAP Material Management module?

Ans:

 SAP Materials Management (MM) is a part of Logistics area and helps to manage the procurement
activity of an organization from procurement.
 It supports all aspects of material management (planning, control etc).
 It is the backbone of the Logistics area which incorporates modules like Sales and Distribution,
Production Planning, Plant Maintenance, Project Systems, Warehouse Management which are
extremely obsessed on Materials Management module.

2) What do you understand from Procurement process in SAP MM?

Ans:

Every organization acquires material or services to complete its business needs. The process of
buying materials and obtaining services from vendors or dealers is procurement.

3) Explain steps in Procurement Lifecycle?

Ans:

Requirement and Information Gathering

 Procurement process starts with gathering information about product and its quantity. Then for
required products and services, it is necessary to look for suppliers who can satisfy the
requirements.

Supplier Contact

 After gathering requirements one will look for the suppliers who can fulfill the requirements. Based
on that quotation request or information request can be made to suppliers or direct contact can be
made with them.

Background Review

 Once the supplier is known product/service quality is checked, and any necessities for services
such as installation, warranty and its maintenance are investigated. Some samples of the products
can be obtained for quality examination.

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 Negotiation

 Some negotiations with suppliers is made regarding price, availability and delivery schedule of the
products/services. After this a contract is signed that is a binding legal document between supplier
and ordering party. A contract will include all necessary information like price and quantity of
material, delivery date, etc.

Order fulfilment

 Ordered material will be shipped, delivered to the ordering party and supplier is paid accordingly.
Training and Installation of product 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.

4) A Purchase requisition is an internal document or external document?

Ans:

Internal document, it is the phase in which purchasing department is informed about the
requirement of items or services required for business purpose.

5) What are the different type of Basic Procurement?

Ans:

There are 2 types of Basic procurement which are shown below −

 Procurement for Stock vs Consumption

 External vs Internal Procurement

6) What is the difference between Procurement for stock vs consumption?

Ans:

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.

7) What is External Procurement?

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Ans:

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.

8) What is Internal Procurement?

Ans:

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.

9) What is Special Procurement?

Ans:

Special Procurement

Special stocks are stocks that are managed differently as these stocks did not belong to company
and these are being kept at some particular location.

10) What is Consignment Stock?

Ans:

Consignment Stocks

Material that is available at our store premises, however it still belongs to the vendor (seller)/Owner
of the material. If you utilize the material from consignment stocks, then you have to pay to the
vendor.

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 11) What are the common assignment types in SAP MM system?

Ans:

 Plant to Company code

 Purchasing organization to company code
 Purchasing organization to Plant
 Standard purchasing organization to plant

12) What are the different Info record types?

Ans:

 Standard
 Consignment
 Subcontracting
 Pipeline

13) How do you flag a material for deletion?

Ans:

A deletion flag can be set at client level, plant level or storage location level. Transaction MM06 is
used to mark a material for deletion.

14) What is the use of Purchase Info Record?

Ans:

Purchasing info record stores information on material and vendor supplying that material. For
Example: Vendors current price of a particular material is stored in info record.

15) Where do you maintain Purchase Info Records in SAP MM?

Ans:

Purchase info record can be maintained at plant level or at purchasing organization level.

16) What is Purchase Order?

Ans:

Purchase order is the formal and final confirmation of the requirements which is sent to vendor to
supply material or services. Purchase order will include important information like name of material

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with its corresponding plant, details of purchasing organization with its company code, name of
vendor, and date for delivery of material.

17) What do you understand by Goods Receipt in SAP system?

Ans:

After processing of purchase order by vendor, material is delivered to ordering party and this
process is called as goods receipt. So, goods receipt is the phase in which the material is received
by the ordering party and the condition and quality are verified. Once material is verified against
quality then goods receipt is posted.

18) How do you post goods receipt?

Ans:

Path to post Goods Receipt −

Logistics ⇒ Materials Management ⇒ Inventory management ⇒ Goods movement ⇒ Goods

movement

T-Code: MIGO

19) What are the different Procurement types that you can create Purchase requisition?

Ans:

Purchase requisition can be created for the following procurement types −

Standard − Getting finished material from vendor.

Subcontracting − Providing raw material to vendor and getting finished material.

Consignment − Procuring material that is kept in company’s premises and paying to vendor for
that.

Stock transfer − Getting material from within the organization.

External service − Getting services like maintenance from third party vendor.

20) How can you create a Purchase Order from Purchase Requisition?

Ans:

Purchase Order from purchase requisition can be created by following below steps −

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 T-Code: ME21N

21) What is Request for Quotation RFQ?

Ans:

Request for quotation is a form of invitation that is sent to vendors to submit quotation indicating
pricing and their terms and conditions.

RFQ contains details about goods or services, quantity, date of delivery and date of bid on which
it is to be submitted.

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

Ans:

In SAP system, you use Document Type to define different methods or procedures for a
transaction.

23) What is free item in SAP system?

Ans:

The Price will be marked zero for free item. We can tick the item as free item while creating PO in
system.

24) Why do you use Material type?

Material type in SAP system is used to group various materials based on some common properties.

25) What is Material Status?

Ans:

It is 2 digit code and is used to determine the material usability.

26) What are the different stock types in SAP system?

Ans:

 Restricted Stock
 Unrestricted Stock
 Quality Inspection Stock
 Blocked Stock
 GR Blocked Stock

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 27) What do you understand by GR Blocked stock?

Ans:

This is conditionally accepted stock and not the unrestricted stock.

28) What are the different Stock transfer types in SAP system?

Ans:

 Inter Company
 Intra Company
 Intra Plant

29) What is Intra plant stock transfer type in SAP MM?

Ans:

Storage Location to Storage Location

30) What is an Outline agreement?

Ans:

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.

31) Is it possible that you can use scales in Quotation?

Ans:

No

32) What do you understand by Material Master? How Material master is maintained in SAP
system?

Ans:

Material master contains information related to different material types like finished product, raw
material. Material master can be used for identifying a product, purchase material, goods issue or
good receipt, MRP and production confirmation.

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For Material master data, use T-code: MM01 or go to Logistics → Production → Master Data →
Material Master → Material → Create (General) → immediately

33) What is the use of BOM usage type 1 in SAP system?

Ans:

It is used for Production

34) How do you create Purchase Order or Purchase Requisition from Material Requirement
Planning?

Ans:

The PR is created according to the safety stock mentioned for the material or can be triggered
from a requirement. For creating a PO, you need to have the scheduling agreement in place. After
the MRP is run the schedule lines are generated which are nothing but the PO.

35) What is MRP run in SAP system?

Ans:

MRP run or planning run is an engine which is used to fill demand and supply gap. Issues &
Receipts are called MRP Elements. Issues include PIRs, Dependent Requirements, Order
Reservations, Sales Orders, Issuing Stock Transfer Orders, etc. and receipts include Production
Orders, Purchase Requisitions, Purchase Orders, Open Production Orders, Receiving Stock
Transfer Order, Schedule lines, etc.

36) How do you check Stock Requirement List in SAP system?

Ans:

This is used to see current stock and planned receipts. Use T-code: MD04

Enter Material and Plant to see list.

37) What is the use of MRP list?

Ans:

MRP List is used to generate static report that contains planning run material wise and it displays
time of MRP run at the top.

Use T-Code: MD05

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38) What is the Production Order?

Ans:

A Production order is used to define the material to be produced, plant location where production
has to be done, date and time of production, quantity of goods required. A Production Order also
defines which components and sequence of operations are to be used and how the order costs
are to be settled.

39) How do you check the available stock at any point of time?

Ans:

You can use Stock overview to check the available stock at any point of time. Stock overview can
be checked using T-Code: MMBE

40) What is a Contract?

Ans:

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.

41) What is the movement type for Goods issue reversal?

Ans:

Movement type is 262 in Goods issue reversal.

42) What is the use of Material Document List?

Ans:

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Material document list is used to generate any goods movement such as goods receipt, goods
issue for a production order, etc.

43) Can you generate packing/picking lists for goods issue in SAP MM?

Ans:

In SAP EWM you can generate packing list.

44) What is a Scheduling agreement?

Ans:

Scheduling agreement is a long term outline agreement between vendor and ordering party over
a predefined material or service which are procured on predetermined dates over a framework of
time.

45) What is Quota Arrangement in SAP system?

Ans:

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

46) How do you check Quota Rating?

Ans:

Quota rating = (Quota Allocated Quantity + Quota Base Quantity)/Quota

47) What is the use of Posting Period in SAP system?

Ans:

SAP ERP systems were designed so that business can be conducted in an efficient way. Various
documents like purchase order, request for quotation, goods receipt are essential documents in a
business. These documents need security i.e. if any of documents is posted incorrectly then
business can be affected at various concern levels. So, to secure these documents we have a
concept of posting period. Posting period means it will allow you to post and make changes in the
documents only in a specific time period.

48) How do you define Posting Period in a company?

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 Ans:

Posting period for a company can be defined using five fields which are as follows −

 Maintain Fiscal Year Variant

 Assign Fiscal Year Variant to Company Code
 Define Variants for Open Posting Periods
 Assign Variant to Company Code
 Open and Close Posting Periods

49) What is the last step in Procurement cycle?

Ans:

 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.

50) What are the integral components in SAP MM?

Ans:

The Components of SAP MM are listed below:

 Purchasing
 Inventory management
 Invoice verification
 Physical inventory
 Valuation
 Materials requirements planning
 Materials master
 Service master
 Foreign trade/customs

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51) Mention t-code to create Purchase Requisition in MM?

Ans:

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 Transaction code ME51N can be used to create Purchase Requisition in MM

52) What are the various types of Basic Procurement?

Ans:

Basic procurement is of 2 types as listed below:

 Procurement for Stock vs Consumption

 External vs Internal Procurement

53) List few of the Common Stock Transport Order Movement Types?

Ans:

By utilizing MT 301, one step transfers of materials can be posted. The other different transport
scenarios vary in the MTs by the good receipt and good Issues. Common Goods Issues may utilize
MTs 303, 351, 641, or 643 in the STO. A STOs Good Receipt generally uses MT 101.

54) List the difference between SAP MDM and SAP MM?

Ans:

MM (Material Management) is a module which deals with the day to day operations of inventory
management (stuff related to material valuation, storage, requirement planning etc ) and
Procurement processes ( is related to goods, receipt, Purchase orders BOMs etc).

MDM refers to Master Data management, It is business specific data, which encompasses
information regarding vendor/customer names, Product descriptions, along with banking
information.

55) What is Pricing procedure in MM?

Ans:

In the MM module, the Pricing procedure is a channel for determining the prices in purchasing
documents. This give us functionality for assigning different calculation types for various needs.
During PO and RFQ creation In MM module, the pricing procedure is utilized. The total value of
material is based on all the addition and subtraction such as surcharge, discount, tax, freight, etc.

56) What are the steps needed to configure pricing procedure in SAP MM?

Ans:

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 Maintaining Condition Table
 Maintaining Access Sequence
 Maintaining the Condition type
 Maintaining the Calculation Schema
 For the vendor, maintaining the Schema Group
 For Purchasing Organizations, maintaining the Schema Groups
 Assigning Schema Group to Purchasing Organization
 Maintaining Schema Determination
 Assigning Schema group to Vendor
 Maintaining condition record

57) What are the various steps involved in Procurement Cycle of SAP MM?

Ans:

 Determining the requirements of material

 Determining the source
 Selecting the vendor and Comparing the Quotations
 Purchase Order Processing
 Purchase Order Follow-Up
 Receiving Goods and managing Inventory
 Verifying the Invoice
 Payment to vendor

58) How can we post goods receipt?

Ans:

In T-Code: MIGO navigate to post Goods Receipt using the path given below −

Logistics -> Materials Management -> Inventory management -> Goods movement -> Goods
movement

59) How can a user link a document to a vendor master record?

Ans:

By using the XK01 transaction code the user can successfully link the document with the vendor
master record or by utilizing the following menu path:

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

60) What do you mean by Special stocks?

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 Ans:

Special stocks are all those stocks which are managed separately as they don’t belong to your
company or these are stored at a specific location.

61) What are the various Special Procurement Types in SAP?

Ans:

Lister below the following special procurement types available in the SAP System:

 Consignment
 Subcontracting
 Stock transfer using stock transport order
 Third-Party Processing
 Returnable transport packaging
 Pipeline Handling

62) How would the user change unit of measures in mmr?

Ans:

Please follow the steps below:

 Go to mm02 t.code
 Enter your mat number
 Now select the over screen and then select basic data 1,
 Now you will find basic unit of measure which you can modify.

63) How can G/L Accounts for MM Account Determination be verified?

Ans:

The program RM07C030 verifies all the G/L account definition in your Material Master valuation
class. User can Search it via Company code and Valuation area.

64) In Materials Management (MM), what is Data Archiving?

Ans:

Data archiving removes mass data which is no longer required by the system (but that still should
be available for reporting) from the database. The SAP data archiving concept is typically based
on the archiving objects of the Archive Development Kit (ADK).

65) Define Stock Population?

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 Ans:

The stock population is known as the total of all stock management units which are encompassed
in an inventory sampling. All these stock management units are exclusively defined through the
allocation of the stock management levels to a given inventory sampling. As a result of this, the
stock population is also defined when the user allocates the level of the stock management.

66) How to make a Dummy Reservation?

Ans:

The user can try to create a new movement type with reference to 201 movement type.

67) How can the user include new custom field in Services tab for a Service PO item?

Ans:

The user can modify the description in the In the user field by customizing (SPRO) and appended
a search help to it.

68) How to create movement type?

Ans:

Assume we are creating movement type 281 Goods issue for a network

Please follow the steps below:

 First, navigate to Transaction OMJJ

 Now the standard movement type 201
 Then click on copy and overwrite the 201 with 281
 Now click the Enter button, then click on Copy all
 Please select the new movement type 281
 Now On the left-hand column screen, click on Reversal/follow-on movement
 At last fill in the reversal movement type

69) What is RTP?

Ans:

RTP (Returnable Transport Packaging) is referred to a multi-trip packaging medium (for instance,
containers or pallets) through which the goods can be transported multiple times between
customers and vendors. Returnable transport packaging from a vendor which is stored at a place

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 on your premises is treated as a special stock and is clearly assigned as a belonging to the vendor.
RTP is vendor’s property, therefore, it is excluded from the customer’s valuated stock.

70) How can the user post returnable Transport Packaging (RTP) Quantities at Goods
Receipt for Purchase Order?

Ans:

A quantity of returnable transport packaging can be entered at goods receipt for a purchase order,
as listed below:

 In Inventory Management menu, navigate to Select -> Goods movement -> Goods receipt -> For
purchase order -> PO number known -> or path PO number unknown.
 On the initial screen please enters the movement type (101) and also the order number (or the
selection criteria for the purchase order).
 Now please select and copy the required items.
 Now in the overview screen, choose Edit -> W/o purchase order -> Enter.
 A popup window will appear, Please enter the movement type and the special stock indicator (e.g.
501 M ) for the quantity of returnable transport packaging.
 Now please enters the returnable transport packaging items.
 At last, post the goods movement.

71) How can you transfer Posting of RTP stock between Storage Locations?

Ans:

A transfer posting of RTP stock between two storage locations is entered as listed below:

 In Inventory Management menu, navigate to Goods movement -> Transfer posting -.

 Now enter data to the initial screen:
 Now nvigate to Movement type Transfer posting -> RTP stock -> SLoc to SLoc -> ( -> 311 M -
>).
 Now give the plant and the issuing storage location.
 Give vendor and the receiving storage location on the next screen.
 Please enter all the items.
 At last, post the goods movement.

72) What is the difference between the stock transfer between two plants belonging to same
company code and those belonging to different company code?

Ans:

Stock Transfer Order (STO) for Intra Company

 The stock transfer between two plants are done with one Company code

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 Purchase Order Type ‘UB’ is used in this case
 Delivery Type ‘NL’ is used
 Goods Movement type is 641 for Intra Company
 Item Category in delivery is NLN

Stock Transfer Purchase Order (STPO) for Intra Company

 Two Different Company Codes are required for Stock Transfer Purchase Orders between two
plants
 Purchase Order Type ‘NB’ is used in this case
 Delivery Type ‘NLCC’ is used
 Goods Movement type is 643 for Inter-Company
 Item Category in delivery is NLC

73) WHAT IS SUB-CONTRACTING CYCLE IN MM?

Ans:

In Sub-contracting, we send raw material or input material to sub-contractor and then receive the
finished goods. A sub-contracting PO is created with item category ‘L’. Input material is sent to
vendor for processing with movement type 541. When GR is done using movement type 101,
movement type 543 takes place automatically and takes care of consumed material.

74) WHAT IS THE DIFFERENCE BETWEEN CONTRACTS AND SCHEDULING

AGREEMENTS?

Ans:

A contract is a pre-determined long term agreement to supply material or service for a certain
period of time. Specific delivery dates are not mentioned in the contracts. Contracts can be of two
types: Value Contract or Quantity contract

In Scheduling agreements, we can enter scheduling lines which gives details of quantity that
should be delivered on specific date. Plant must be entered in SA so that materials can be delivered
at plant. These are generally used for materials whose requirements are predictable.

75) WHAT IS MEANT BY BATCHES?

Ans:

A batch is a subset of the total stock of a material. It represents a homogeneous unit which has
unique specification. Normally, a batch is assigned to the quantity of material produced during a
given production run. A batch number uniqueness can be assigned at any of the following 3 levels:

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At client level: The same batch number can be assigned only once within the entire client.

At material and plant combination level: Same batch number can be assigned to material with
different specification in each plant.

At material number level: A batch assigned to a material has the same specification for all plants
where material is extended. Batch number can be reassigned with a different specification for each
material.

76) IF YOU HAVE A MULTI-LINEITEM PO, CAN YOU RELEASE THE PO ITEM BY ITEM?

Ans:

No, a PO is released at the header level meaning a total release or “With Classification”. PRs, on
the other hand, have two release procedures possible. “With Classification” as described above,
and “Without Classification” where it is only possible to release the PR item by item

77) WHAT IS A PRICE COMPARISON?

Ans:

Perform a price comparison using ME49 and one may compare quotations from different vendors.

78) WHAT IS A QUOTATION?

Ans:

Once a vendor has received an RFQ, the vendor will send back a quote that will be legally binding
for a certain period of time. Specifically, a Quotation is an offer by a vendor to a purchasing
organization regarding the supply of material(s) or performance of service(s) subject to specified
conditions.

79) WHAT ARE THE DIFFERENT TYPES OF INVOICE VERIFICATION?

Ans:

Invoices based on Purchase Orders. With purchase-order-based Invoice Verification, all of the
items of a purchase order can be settled together, regardless of whether or not an item has been
received in several partial deliveries. All of the deliveries are totaled and posted as one item.
Invoices based on Goods Receipts. With goods receipt-based Invoice Verification, each individual
goods receipt is invoiced separately. Invoices without an order reference. When there is no
reference to a PO, it is possible to post the transaction directly to a Material Account, a G/L

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Account, or an Asset Account. You can park Invoices that reference POs and GRs as well as
Invoices with no reference in the system. When you park a document or change a parked
document, neither substitution nor validation is supported.

80) WHAT IS THE USE OF ‘SPLIT VALUATION’?

Ans:

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.

81) HOW DO YOU SET ‘AUTOMATIC ACCOUNT ASSIGNMENT’ IN MM?

Ans:

Once OBYC settings are properly done, system finds the correct G/L account using the following
data:

Chart of Accounts: Chart of Accounts is determined based on plant or company code used in
transaction

Valuation Grouping Code: It is determined based on the valuation area. Valuation Grouping Code
is maintained in t-code OMWD.

Transaction Key: eg. BSX, GBB etc. Transaction keys are determined automatically from the
transaction (invoice verification) or the movement type (inventory management).

Account grouping /Account Modifier (only for offsetting entries, consignment liabilities, and price
differences)

Valuation class of material or (in case of split valuation) the valuation type: The valuation class
allows you to define automatic account determination that is dependent on the material. This can
be achieved by assigning different valuation classes to the materials in material master
(Accounting view) and by assigning different G/L accounts to the posting transaction for every
valuation class.

82) WHAT IS A BUSINESS AREA?

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Ans:

The business area is an organizational unit within financial accounting. It corresponds to a defined
business segment or area of responsibility, to which value movements recorded in Financial
Accounting can be assigned. It is usually derived automatically as it linked to other organizational
units. For eg. Business area for a combination of plant and division is maintained by t-code OMJ7.

83) WHAT IS A COST CENTER?

Ans:

Cost Center accounting is used for controlling purposes. It is an organizational unit within a
controlling area which represents a defined location of cost incurrence. For example, any
department can be a cost center for recording all expenses incurred for that department.

84) WHAT IS A PROFIT CENTER?

Ans:

Profit Center Accounting evaluates the profit or loss of individual, independent areas within an
organization. Profit center is an organizational unit in controlling to recognize your profit. Profit
center is attached to material master at plant level.

85) HOW TO CREATE TAX CALCULATION PROCEDURE IN MM?

Ans:

Tax can be calculated for each line item of a PO separately based on the 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. Tax procedure contains the condition type and necessary
specification for each condition type. Account keys are assigned to condition types and these
account keys determine the G/L to which the tax amount is to be posted(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 country are linked with tax procedure. Thus, based on tax code, corresponding tax procedure
is determined and then calculation is done based on condition types in that tax procedure.

86) HOW IS SCRAP MATERIAL TAKEN CARE OF IN SUB-CONTRACTING?

Ans:

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Scrap can be maintained in BOM as operational scrap, component scrap, By-Product or Co-
Product. Common practice is to maintain scrap as by-product and receive it back along with
processed material.

87) What is RFQ?

Ans:

RFQ is a Request for quotation. It is an invitation that is sent to sellers to submit quotes showing
pricing and also terms and conditions. RFQ also has details regarding the date of delivery, goods
and services, quantity, and date of submission also.

88) What do you mean by consumption-based planning (CBP)?

Ans:

Consumption-based planning or CBP is depended upon past consumption values. It is used to

forecast to find out future requirements. These processes in CBP do not rely on the master
production schedule. It is activated either when the stock level comes below a particular reorder
point or when forecast needs calculating with past consumption values.

89) What is MIRO?

Ans:

MIRO means movement in receipt out. It deals with invoice verification activities in terms of bills
that raised from the vendor’s end. MIRO is basically used by MIRO.

90) What is an RFI?

Ans:

RFI means a request for information. It is used for the business process that assembles written
information about the competencies of sellers.

91) What is an RFP?

Ans:

RFP means Request for Proposal. It is a document where a proposal is sent by a company or
agency for the acquisition of some goods and services to any potential seller to send business
proposals.

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 92) Which steps are used in the RFQ process?

Ans:

There are a number of steps used to process RFQ:

First, enter the t-code (transaction code) as ME41, then enter the RFQ type as ‘AN.’

After this, write down the location, i.e., the late date when the seller submits the quotation. Now,
enter the purchasing group, delivery date, and other information, and press on the click button.

After this, you will be able to watch a new screen wherein you have to fill the item codes. Now
enter the item codes and also the vendor’s details.

Moreover, more requests can be made as per vendors’ details.

93) What is a goods receipt and post goods receipt?

Ans:

When the physical inbound transfer of material and goods are made into the warehouse is known
as Goods receipt. It includes the transfer of those goods that have received from in-plant
production or external vendors. Issuing of goods receipt always results in a hike in stock in the
warehouse.

When the receipt of goods are posted with reference to the purchase order with which products or
goods were ordered are known as a post-goods receipt. When the material is sent with reference
to a purchase order, then all departments must make an entry in the system references.

94) How is the vendor created?

Ans:

You can create a vendor by using the transaction code XK01 and performing the following steps:

 Add the vendor name, company code, purchasing organization, account group, and vendor
address.
 Add the country, bank key, bank account, and the name of the account holder.
 Save the data.
 This creates a vendor record in the system.

95) What data in material master is maintained at the client level?

Ans:

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The general data, i.e., the data applicable to the company as a whole, is stored at the client level.
( apex training )

96) What is vendor master data?

Ans:

Vendor master data contains details of each vendor that supplies materials or services to an
enterprise. The vendor master data is stored in individual vendor master records consisting of data,
such as the vendor’s name, the vendor’s address, the currency used for the transaction, payment
terms, and the contact person’s name (on the sales staff).

97) What are the different sections in vendor master data?

Ans:

Following are the three sections in vendor master data:

General data— Provides general information about the vendor that can be entered into the system
for creating vendor records. General data can provide the name, address, telephone, and fax of
the vendor through specified search terms. Additional information can also be added to the vendor
master record by the accounting and purchasing departments using the transaction code XK01.

Accounting data —Refers to financial information entered at the company code level. The financial
information includes tax information, bank details, reconciliation account, payment terms, payment
methods, and dunning information. You can enter this financial data using the transaction code
FK01.

Purchasing data —Refers to data entered while creating a vendor at the purchasing organization
level. Different purchasing organizations have different purchasing data. The purchasing data
includes partner functions, purchasing default fields, and invoice verification indicators. You can
enter this data using the transaction code MK01.

98) What are the prerequisites for creating a purchasing info record?

Ans:

The prerequisites for creating a purchasing info record are as follows:

Material number —Before creating a purchasing info record, the material number of the material
master record should be known.

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Manufacturer part number (MPN) material number —Before ordering a material that has an MPN,
you must know its MPN material number.

Vendor number —You should also know the number on the vendor master record.

99) What are the differences between company-owned special stocks and externally-owned
special stocks?

Ans:

The differences between company-owned special stocks and externally-owned special stocks are
listed in the following table:

Company-Owned Special Stocks

Externally-Owned Special Stocks

Stocks that belong to the company but are stored with the wholesaler or the customer are called
company-owned special stocks.

Stocks that belong to the wholesaler or the customer but are stored at the company are called
externally-owned special stocks.

Company-owned special stocks are managed at the production level.

Externally-owned special stocks are managed at the place where they are stored. ( data science
online training )

Organizational level —If the purchasing info record is for a particular purchasing organization or
plant, then the code specific to that purchasing organization or plant is required.

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 ADVANCE QUESTIONS

What is the difference between a

Purchase Requisition and a
Purchase Order?
A PR is an internal document that sends & nbsp ;notification to purchase department
when some material is service is required. PR can be generated by department that
needs any material or service.

A PO is a document sent to vendor by purchaser which is an official request of

mentioned material or services. POs are generally binding on purchaser, though it
depends on terms and conditions mentioned in PO.

What MRP procedures are

available in MM-CBP
(Consumption Based Planning)?
Various material planning methods are used in MRP (Material Requirements Planning).
Reorder point procedure (VM) Forecast-based planning (VV) Time-Phased materials
planning (PD) These are specified in material creation (MM01) under the MRP 1 tab.

Can you change a Purchase

Requisition after it has been
created?
Yes. Use Transaction ME52N. Check to see if the PR has already had a PO issued
against it. If so, you must inform the Purchasing Group. Check if the PR has been
approved. If so, you may only make changes to a limited extent and may be subject of
approval. Check if the PR was created by MRP. In this case, you don’t have much
control over the modification process. All changes to items are logged and stored.
Information stored includes when the information was changed, who changed it, what
the changes were, etc.

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How do we create Consignment
Stocks?
Everything is the same as a normal PR or PO, except: Enter the item category “K” for
the consignment item. This ensures that the Goods Receipt is posted to the
consignment stores and an invoice receipt cannot be generated for the item. Also, do
not enter a net price.

What is Vendor Evaluation and

how do you maintain it?
Vendor Evaluation helps you select the Source of Supply by a score assigned to a
particular vendor. The scores are on a scale of 1 to 100 and are based on differing
criteria. Use Transaction ME61 and enter the Purchasing Organization and Vendor
Number.

What are the components of the

Master Data that details a
company’s procurement; used by,
Vendor Evaluation for example?
The key components of Master Data are: Info Record (ME11), Source List (ME01),
Quota Arrangement (MEQ1), Vendor (MK01), Vendor Evaluation (ME61), and Condition
Type (MEKA).

How do we get a proper list of

vendors to send an RFQ?
Either use the Information Record to see who has sold a particular material to the
organization in the past, or go through the Source List.

How do you create a Source List?

Use Transaction ME01. Enter the Material Number and the Plant Data. Enter source list
records, validity period, period of time material is procurable, Vendor Number,
responsible Purchasing Organization (or number of the Agreement or Contract), PPL (if
the material can be procured from another plant), Fixed Source (?), MRP control. Also, a
check should be done to see whether any source list records overlap.

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What are different Info Records
types?
Different Info Record types are Standard, Consignment, Sub-Contracting and Pipeline.

Under what conditions are

“planned orders” created? What
may planned orders be converted
to and how is that conversion
accomplished?
Planned orders are always created when the system creates an internal procurement
proposal. In the case of vendor procurement, the MRP Controller may create a planned
order or directly create a PR. The next step for a planned order is to be converted to a
PR so it goes to purchasing and is to eventually become a PO. A planned order can be
converted to a PR using transaction code MD14.

What is a consignment Stock?

The stock supplied by the vendor is in the purchasing company’s premises but the
company has no liability for the same. The liability for the company will only arise one
the goods are issued from the consignment stock for use. However, in this case, even
before the use, purchasing company can check in system how much stock is lying in
inventory.

What is Sub-Contracting cycle in

MM?
In Sub-contracting, we send raw material or input material to sub-contractor and then
receive the finished goods. A sub-contracting PO is created with item category ‘L’. Input
material is sent to vendor for processing with movement type 541. When GR is done
using movement type 101, movement type 543 takes place automatically and takes care
of consumed material.

What is meant by Scales in MM?

When we maintain price in Info Records, we can make use of scales. It is used when
price of a material is dependent on quantity purchased. For eg. For 500 pieces of
material ABC, price is Rs. 10, however, if the order quantity is more than 500, price is

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Rs. 9. Scales are maintained in various master data like info record, quota arrangement
etc. from where scales can be pulled in a Purchase Order.

How to Flag a material for

deletion?
A material must be flagged for deletion before deleting it using Archive and Delete
program. A deletion flag can be set at client level, plant level or storage location level.
Whatever level you flag a material for deletion, it is flagged for deletion at all
corresponding lower levels. Transaction MM06 is used to flag a material for deletion.

Can a material be used after

flagging it for deletion?
Yes, even after flagging a material for deletion, it can be used till it is actually deleted. It
will just trigger a warning message whenever the material is used. If you want a material
to be blocked for any use with immediate effect, you should use a material status which
is there in Basic View 1 for general level or in MRP 1 view for plant level blocking.

What is the function of OBYC?

OBYC is t-code used for configuring Automatic Account Posting.

Postings are made to G/L accounts automatically in the case of Inventory Management
and Invoice Verification relevant to Financial and Cost Accounting.

What is valuation grouping code

related to OBYC?
Valuation grouping code is used to group the valuation area, In SAP, we can have
valuation level at Company code level or at plant level.

General practice is to use the valuation area at plant level, because valuation may differ
from one plant to another. The valuation grouping code makes it easier to set automatic
account determination. If we need to define common account determination for several
valuation areas, we can assign same valuation grouping code to all those valuation
areas. We can maintain the valuation group code in OMWD for various valuation areas.

What types of special stocks are

available?
pecial stock types available in SAP are Consignment, Subcontracting, pipeline, project,
sales order stock, Returnable transport packaging, stock transfer, and the third party.

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 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. Specific delivery dates are not mentioned in the contracts.
Contracts can be of two types: Value Contract or Quantity contract

In Scheduling agreements, we can enter scheduling lines which gives details of quantity
that should be delivered on specific date. Plant must be entered in SA so that materials
can be delivered at plant. These are generally used for materials whose requirements
are predictable.

How can we create new

transaction codes in SAP?
New transaction codes can be created using t-code SE93.

What are release procedures with

and without classification?
Release Strategy with Classification:
 PR can be released at header level as well as item level.
 It can be used for both internal/external documents.
 Can be set on any field available in structure CEBAN
Release Strategy without Classification:
 PR can be released only at item level.
 It can be used only for internal documents such as PR.
This strategy can be used only on 4 parameters which are Account assignment
category, Plant, Material Group and value of PR.

What is meant by batches?

A batch is a subset of the total stock of a material. It represents a homogeneous unit
which has unique specification. Normally, a batch is assigned to the quantity of material
produced during a given production run. A batch number uniqueness can be assigned at
any of the following 3 levels:

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At client level: The same batch number can be assigned only once within the entire
client.

At material and plant combination level: Same batch number can be assigned to
material with different specification in each plant.

At material number level: A batch assigned to a material has the same specification for
all plants where material is extended. Batch number can be reassigned with a different
specification for each material.

How to handle free items in PO?

While creating PO, we can tick the item as free item in item overview section of PO. The
price will be zero for free marked item.

What information is maintained in

Accounting View of material
master?
Accounting view is a plant specific view. Besides other information, it contains important
information such as valuation class and price control. Valuation class helps in
determining the relevant GL account used for account posting. It is also used while
configuring OBYC settings. Price control indicator determines if material is maintained at
Standard price(S) or Moving average price (V).

What is the use of Material types?

‘Material Types’ is used to group various materials based on some common properties.
It helps in maintain material master data for a particular material. Using material types,
we can control which all views are required for a material type, which fields are required
or optional, the material number range etc.

If you have a multi-line item PO,

can you release the PO item by
item?
No, a PO is released at the header level meaning a total release or “With Classification”.
PRs, on the other hand, have two release procedures possible. “With Classification” as
described above, and “Without Classification” where it is only possible to release the PR
item by item

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What is a Material Type?
A Material Type describes the characteristics of a material that are important in regards
to Accounting and Inventory Management. A material is assigned a type when you
create the material master record. “Raw Materials”, “Finished Products”, and “Semi-
Finished Products” are examples. In the standard MM module, the Material Type of ROH
denotes an externally procured material, and FERT indicates that the relevant material is
produced in-house.

What is a price comparison?

Perform a price comparison using ME49 and one may compare quotations from different
vendors.

What is a Source List?

The Source List identifies preferred sources of supply for certain materials. If it’s been
maintained, it will ID both the source of supply and the time period. The Source List
facilitates gaining a fixed source of supply, blocked source of supply, and/or helps us to
select the proffered source during the source determination process.

What are the various “steps” in the

MM Cycle from material creation
through invoice?
The following creates a rough picture of the MM Cycle. Create material, create vendor,
assign material to vendor, procure raw material through PR, locate vendor for certain
material, processing GR, goods issue, and invoice verification.

Give some examples of the

information relating to a material’s
storage/warehousing?
Some examples are Unit of Issue, Storage Conditions, Packaging Dimensions, Gross
Weight, Volume, and Hazardous Materials Number. Also, there are various Storage
Strategies information and options.

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What are the various features of
Consignment Stocks?
Consignment Stocks remain the legal property of the Vendor until the organization
withdraws the material from the consignment stores. The invoice can be due at set
periods of time, for example monthly, and it is also a configuration possibility that the
organization will take ownership of the stock after a certain period of time. Consignment
Stock is allocated to the available stock because the Consignment Stock is managed
under the same material number as your company’s stock. The most important
characteristic of Consignment Stock is that it isn’t valuated. When the material is
withdrawn, it is valuated at the price of the respective vendor. Before procuring the
stock, consideration should be given if one consignment is coming from multiple
vendors. If so, we can manage all of them independently at the price of the individual
vendors.

What is a Quotation?
Once a vendor has received an RFQ, the vendor will send back a quote that will be
legally binding for a certain period of time. Specifically, a Quotation is an offer by a
vendor to a purchasing organization regarding the supply of material(s) or performance
of service(s) subject to specified conditions.

What is the Source List?

The Source List identifies preferred sources of supply for certain materials. If the Source
List has been properly maintained, it will identify both the source of a material and the
period of time in which you can order the material from the source.

What is an Invoice Verification?

The Invoice Verification component completes the material procurement process and
allows credit memos to be processed. Invoice Verification includes entering invoices and
credit memos that have been received, checking accuracy of invoices with respect to
price and arithmetic, and checking block invoices (these are the ones which differ too
much from the original PO).

What are the different types of

Invoice Verification?
Invoices based on Purchase Orders. With purchase-order-based Invoice Verification, all
of the items of a purchase order can be settled together, regardless of whether or not an
item has been received in several partial deliveries. All of the deliveries are totalled and
posted as one item. Invoices based on Goods Receipts. With goods receipt-based
Invoice Verification, each individual goods receipt is invoiced separately. Invoices
without an order reference. When there is no reference to a PO, it is possible to post the

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transaction directly to a Material Account, a G/L Account, or an Asset Account. You can
park Invoices that reference POs and GRs as well as Invoices with no reference in the
system. When you park a document or change a parked document, neither substitution
nor validation is supported.

Why would an organization need

to allow Negative Stocks?
Negative Stocks are necessary when Goods Issues are entered necessarily (business
process reasons) prior to the corresponding Goods Receipts and the material is already
located physically in the warehouse.

What is the use of ‘Partner

Functions’ for a vendor?
Partner Function is used to define responsibilities and duties of other business partners.
Some partner functions are AZ(Alternate payee), CR(Carrier), OA(Ordering address),
GS(Goods supplier), PI(Invoice presented by) etc.

What is the use of ‘Material

Status’?
Material Status helps in determining the usability of a material. It is a 2-digit code which
can be maintained as 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 valuated. It can be Standard Price(S) or Moving Average Price(V). If the
indicator is set to S, all inventory postings are posted at standard price maintained in
material master. If there are variances in any transaction due to different price, the
variance is posted in price difference account.

If 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 weighted average formula. If
goods movements or invoice receipts are posted using a price that differs from the
moving average price, the differences are posted to the stock account.

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What are various types of Stock
transfer?
The physical movement of stock between different physical locations is called as ‘Stock
transfer’. Stock transfer can be either a single step process or a two-step process.

Various Stock transfers are:

Inter Company (Company to Company)

Inter Plant/Intra Company (Plant to Plant)

Intra Plant (Storage location to Storage location)

What are various Stock Types?

In SAP, commonly used stock types are:

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)

What are various procedures for

counting Physical Inventory?
Physical Inventory procedures in SAP MM are as follows:

Periodic Inventory (All stocks are counted on a pre-determined date)

Continuous Inventory (stocks are counted continuously during the entire fiscal year)

Cycle Counting (Counting is done at fixed intervals)

Inventory Sampling (Randomly selected material stocks are physically counted on the
balance sheet key date. If variances are small enough, it is presumed that the book
inventory balances for the other stocks are correct.)

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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.

What are the various stock

valuation methods?
Stock revaluation can be done by following three methods:

LIFO(Last In First Out): Materials received last are consumed first. You can assume
example of elevator where people who enter last exit first!

FIFO(First In Firs Out): Materials received first are consumed first.

Lowest Value Method: Stocks are valued at their original price or the current market
price whichever is lower.

What are the organizational levels

of the Enterprise Structure in R/3?
The top level of the organizational plan is the Client, followed by Company Code, which
represents a unit with its own accounting, balance, P&L, and possibly identity
(subsidiary). The next level down is Plant, an operational unit within a company (HQ,
Assembly Plant, Call Centre, etc.). The Purchasing Organization is the legally
responsibly group for external transactions. This group is further subdivided into
Purchasing Groups.

How do you set ‘Automatic

Account Assignment’ in MM?
Once OBYC settings are properly done, system finds the correct G/L account using the
following data:

Chart of Accounts: Chart of Accounts is determined based on plant or company code

used in transaction

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Valuation Grouping Code: It is determined based on the valuation area. Valuation
Grouping Code is maintained in t-code OMWD.

Transaction Key: eg. BSX, GBB etc. Transaction keys are determined automatically from
the transaction (invoice verification) or the movement type (inventory management).

Account grouping /Account Modifier (only for offsetting entries, consignment liabilities,
and price differences)

Valuation class of material or (in case of split valuation) the valuation type: The valuation
class allows you to define automatic account determination that is dependent on the
material. This can be achieved by assigning different valuation classes to the materials
in material master (Accounting view) and by assigning different G/L accounts to the
posting transaction for every valuation class.

What is ‘Transaction Keys’ while

setting OBYC?
Since each movement type is assigned to a ‘value string’ which in turn is identified with a
transaction key, the goods movement determines the correct transaction key.
Transaction Keys’ are pre-defined in the system to enable transaction postings in
Inventory Management and Accounting (Invoice Verification).

Examples of pre-defined transaction keys are:

BSX (Inventory Postings)

WRX (GR/IR Clearing Postings)

PRD (Cost/Price differences)

UMB (Revenue/Expenses from revaluation)

GBB (Offsetting entries in Stock postings)

BSX, WRX, and PRD are relevant for a GR with reference to a purchase order for a
material with standard price control. The transaction key UMB is used when the standard
price has changed and the movement is posted to a previous period. GBB is used to
identify the GL account to post to as the offsetting entry to the stock account (when not
referencing a purchase order) such as miscellaneous goods receipts, goods issues for
sales orders with no account assignment, and scrapping etc.

What is a Business Area?

The business area is an organizational unit within financial accounting. It corresponds to
a defined business segment or area of responsibility, to which value movements

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recorded in Financial Accounting can be assigned. It is usually derived automatically as
it linked to other organizational units. For eg. Business area for a combination of plant
and division is maintained by t-code OMJ7.

What is a Cost Center?

Cost Center accounting is used for controlling purposes. It is an organizational unit
within a controlling area which represents a defined location of cost incurrence. For
example, any department can be a cost center for recording all expenses incurred for
that department.

What is a Profit Center?

Profit Center Accounting evaluates the profit or loss of individual, independent areas
within an organization. Profit center is an organizational unit in controlling to recognize
your profit. Profit center is attached to material master at plant level.

How to create Tax calculation

procedure in MM?
Tax can be calculated for each line item of a PO separately based on the 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. Tax procedure contains the
condition type and necessary specification for each condition type. Account keys are
assigned to condition types and these account keys determine the G/L to which the tax
amount is to be posted(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 country
are linked with tax procedure. Thus, based on tax code, corresponding tax procedure is
determined and then calculation is done based on condition types in that tax procedure.

How is scrap material taken care

of in sub-contracting?
Scrap can be maintained in BOM as operational scrap, component scrap, By-Product or
Co-Product. Common practice is to maintain scrap as by-product and receive it back
along with processed material.

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