SAP MM (Material Management): A Comprehensive Guide to Inventory and Procurement

This guide explores SAP MM (Material Management), a crucial module in the SAP ERP system. Learn about its functionalities in managing materials, procurement processes, and inventory control. Discover the key advantages of using SAP MM and understand the importance of master data within this module.

Top SAP MM Interview Questions and Answers

What is SAP MM?

Question 1: What is SAP MM?

SAP MM (Material Management) is a module within the SAP ERP system responsible for managing materials and procurement processes. It handles various aspects of material planning, purchasing, inventory control, and invoice processing.

Advantages of SAP MM

Question 2: Advantages of SAP MM

Benefits of using SAP MM:

  • Reduced material costs.
  • Minimized inventory losses.
  • Improved efficiency of labor.
  • Faster delivery times.
  • Enhanced transparency.
  • Better inventory management.
  • Effective product lifecycle management.

Master Data in SAP MM

Question 3: Master Data in SAP MM

Key master data in SAP MM:

  • Material Master: Contains data about materials (description, specifications, etc.).
  • Vendor Master: Contains data about suppliers.
  • Purchasing Info Records: Stores data about sources of supply.

Essential Components of SAP MM

Question 4: Essential Components of SAP MM

Core components:

  • Vendor Selection
  • Source Determination
  • Purchase Requisition
  • Purchase Order
  • Goods Receipt
  • Invoice Verification
  • Inventory Management

Goods Receipt and Post Goods Receipt

Question 5: Goods Receipt and Post Goods Receipt

In SAP MM:

  • Goods Receipt: Records the physical receipt of materials into inventory.
  • Post Goods Receipt: Links the goods receipt to a purchase order, updating inventory levels and accounting entries.

Types of Stock in SAP MM

Question 6: Types of Stock in SAP MM

SAP MM manages different stock types:

  • Valuated Stock: Materials with assigned values (unrestricted, blocked, quality inspection).
  • Non-Valuated Stock: Materials without assigned values.
  • Special Stock: Materials managed under specific rules (e.g., consignment, subcontracting).

Consignment Stock

Question 7: Consignment Stock

Consignment stock refers to materials that are stored at the buyer's location but remain the property of the vendor until consumed or used by the buyer.

Purchase Requisition

Question 8: Purchase Requisition

A purchase requisition is an internal document that initiates the procurement process. It indicates that materials or services are needed.

Purchasing Info Records

Question 9: Purchasing Info Records

Purchasing info records store information about vendors and materials. They contain information like vendor details, material details, pricing, and delivery information.

Internal Procurement

Question 10: Internal Procurement

Internal procurement refers to procuring materials or services from within the same organization (e.g., one subsidiary supplying another).

Special Procurement

Question 11: Special Procurement

Special procurement in SAP MM handles materials that aren't owned by the company or are managed under specific rules (e.g., consignment, subcontracting).

Procurement Lifecycle

Question 12: Procurement Lifecycle Steps

The procurement process includes:

  1. Requirements Gathering: Identifying needs and quantities.
  2. Supplier Selection: Finding appropriate suppliers.
  3. Background Check: Assessing supplier quality and capabilities.
  4. Negotiation: Agreeing on terms and conditions.
  5. Order Fulfillment: Delivery and payment.
  6. Post-procurement Activities: Monitoring performance and managing returns.

Types of Special Stock (Again)

Question 13: Types of Special Stock

Examples of special stock types: subcontracting, consignment, project stock, pipeline stock, sales order stock, stock transfers, and returnable packaging.

Common Assignment Types

Question 14: Common Assignment Types

Common assignment types in SAP MM:

  • Purchasing organization to company code
  • Purchasing organization to plant
  • Plant to company code

Purchasing View Fields

Question 15: Important Fields in Purchasing View

Key fields in the purchasing view of a material master record:

  • Unit of measure
  • Order unit
  • Purchasing group
  • Material group
  • Validity period
  • Tax code
  • Manufacturer part number

Purchase Order

Question 16: Purchase Order

A purchase order is a formal document sent from a buyer to a supplier confirming the terms and conditions of a purchase.

Batch Records

Question 17: Batch Records

Batch records in SAP MM track the details of individual batches of materials produced. This is especially important for maintaining traceability and ensuring quality control.

Linking Documents to Vendor Master Records

Question 18: Linking Documents to Vendor Master Records

You can link documents to a vendor master record using transaction code XK01 or via the SAP menu path: Logistics → Material Management → Purchasing → Master Data → Vendor → Central → Create.

Common Assignment Types (Again)

Question 19: Common Assignment Types in SAP MM

Common assignment types include:

  • Purchasing organization to company code.
  • Plant to company code.
  • Purchasing organization to plant.

Information Records

Question 20: Information Records

Information records store data about materials, vendors, and purchasing conditions (pricing, delivery times, etc.).

Deleting Batches

Question 21: Deleting a Batch in SAP MM

Transaction code MSC2N is used to delete batches. Alternatively, you can flag the batch record for deletion.

Releasing Purchase Orders

Question 22: Releasing a Purchase Order

Purchase orders are released at the header level, affecting all items within the order. Transaction code ME29N is used to manage purchase order releases.

Extending Material Views

Question 23: Extending Material Views

Transaction code MM50 is used to extend material views in SAP MM.

Consignment Stock (Again)

Question 24: Consignment Stock (Again)

Consignment stock belongs to the vendor until consumed by the buyer.

Source List

Question 25: Source List

A source list in SAP MM identifies potential suppliers for a given material. Transaction code ME01 is used to create source lists.

ERS (Evaluated Receipts Settlement)

Question 26: ERS (Evaluated Receipts Settlement)

ERS is a process for automatic invoice settlement based on purchase orders and goods receipts. It eliminates the need for separate invoices from vendors.

Prerequisites for Purchasing Info Records

Question 27: Prerequisites for Purchasing Info Records

To create a purchasing info record, you'll need:

  • Material number
  • Manufacturer part number (MPN)
  • Vendor number
  • Organizational data (plant, purchasing organization)

Flagging Materials for Deletion

Question 28: Flagging Materials for Deletion

You can flag materials for deletion using transaction code MM06.

Changing Standard Price

Question 29: Changing Standard Price

You can't directly change the standard price. Instead, you define a future price using transaction code MBEW and specify the effective date.

Purchase Information Records

Question 30: Keeping Purchase Information Records

Maintaining purchase information records is crucial for tracking vendor data, material pricing, and other essential purchasing details.

Planned Delivery and GR Processing Time

Question 31: Planned Delivery Time and GR Processing Time

These terms describe the time needed for material delivery and goods receipt processing.

Goods Receipt

Question 32: Goods Receipt

A goods receipt records the physical receipt of materials, triggering updates to inventory levels.

Purchase Requisition

Question 33: Purchase Requisition

A purchase requisition formally requests materials or services from the purchasing department.

RFQ (Request for Quotation)

Question 34: RFQ (Request for Quotation)

An RFQ is a request sent to potential suppliers to obtain price quotes and other details for a purchase.

Production Order vs. Purchase Order

Question 35: Production Order vs. Purchase Order

A production order specifies internal manufacturing; a purchase order requests materials from an external supplier.

Material Valuation

Question 36: Material Valuation

Material valuation in SAP MM determines the value of materials in inventory for accounting purposes.

Document Type

Question 37: Document Type

Document types in SAP MM specify the type of transaction (e.g., purchase order, goods receipt).

Storage Location

Question 38: Storage Location

A storage location in SAP MM is a physical location within a plant where materials are stored.

Purchase Info Record

Question 39: Purchase Info Record

A purchase info record stores vendor-specific data for a material (e.g., price, delivery time).

Creating Vendor Account Groups

Question 40: Creating Vendor Account Groups

You create vendor account groups in SAP MM using transaction code OBCL.

Purchase Requisition Procurement Types

Question 41: Purchase Requisition Procurement Types

Procurement types for purchase requisitions: stock transfer, subcontracting, standard, external service, and consignment.

Master Data

Question 42: Master Data

Master data in SAP is central, relatively static data (e.g., material data, vendor data) that is used across different modules.

Question 43: Consumption-Based Planning (CBP)

CBP (Consumption-Based Planning) in SAP MM forecasts future material requirements based on past consumption data. It triggers procurement when stock levels fall below a reorder point or when a forecast is required.

Material Requirements Planning (MRP)

Question 44: Material Requirements Planning (MRP)

MRP (Material Requirements Planning) in SAP MM is a planning tool used to determine the required quantities of materials needed for production or procurement. It calculates the net requirements based on sales forecasts (SOP) and production schedules.

MRP vs. CBP

Question 45: MRP vs. CBP

Key difference:

  • MRP: Demand-driven planning based on sales and operations planning (SOP).
  • CBP: Demand-driven planning based on historical consumption data.

Transaction Codes

Question 46: Transaction Codes in SAP MM

Transaction codes are used to access specific functions in SAP. They are typically entered into the command field of the SAP GUI.

Material Ledger

Question 47: Material Ledger

The material ledger in SAP MM tracks all transactions related to the valuation of materials. This information is used for accounting and financial reporting. The material ledger includes financial information relevant for the valuation of the material.

Vendor Returns Without Purchase Order

Question 48: Vendor Returns Without Purchase Order

To process a vendor return without a purchase order reference:

  1. Use transaction code MBST.
  2. Use movement type 161 (reduce stock) or 162 (reverse goods receipt).
  3. Ensure the document type reflects a return.

Master Production Schedule (MPS)

Question 49: Master Production Schedule (MPS)

The MPS (Master Production Schedule) in SAP MM plans the production of finished goods, specifying quantities and delivery dates.

Confirmation Control Key (CCK)

Question 50: Confirmation Control Key (CCK)

The CCK determines whether confirmation is required for purchase order items.

Invoicing Accounts

Question 51: Accounts Used in Invoicing

Accounts used in invoicing include vendor accounts, stock accounts, GR/IR (Goods Receipt/Invoice Receipt) clearing accounts, tax accounts, and price/cash difference accounts.

Batch Information Cockpit (BIC)

Question 52: Batch Information Cockpit (BIC)

The BIC (Batch Information Cockpit) provides a central location for viewing and managing information about batches in SAP MM.

Lot Size

Question 53: Lot Size in SAP MM

Lot size defines the quantity of material to be ordered or produced at one time. Different lot-sizing procedures are available.

Release Groups

Question 54: Release Groups

Release groups in SAP MM are used to control the release of purchase requisitions and purchase orders. They are assigned release codes or release strategies.

Split Valuation

Question 55: Split Valuation

Split valuation in SAP MM allows you to value materials separately based on criteria such as origin or quality. This supports more precise inventory valuation.

Material Valuation and Financial Accounting

Question 56: Material Valuation and Financial Accounting

Material valuation in SAP MM is integrated with financial accounting. Changes to material values update the corresponding G/L (General Ledger) accounts.

Account Assignment in SAP MM

Question 57: Account Assignment in SAP MM

Account assignment in SAP MM is crucial for purchase order items. It defines the cost accounting aspects of your purchase orders.

Displaying Reservations

Question 58: Displaying Reservations

Transaction code RM07RESL or report RM07RESL can be used to display a list of all reservations in SAP MM.

Changing Batch Records

Question 59: Changing Batch Records

Transaction code MSC2N is used to change batch records. All changes are auditable.