SAP MM Interview questions and answers

After working 17+ years in SAP, providing training to more than 400 students I am writing this post to share critical and tricky SAP MM interview questions and answers. I am sure that this will help you not only to crack interview questions but also to face your client at all levels. This post is divided into different headings and sub headings to show topicwise SAP MM interview questions. It will solve your interview preparation problem. You can read it even one night before your interview. Please enjoy it and suggest to improvise it.

Here are the SAP MM interview questions:

Organization Structure in SAP MM

1. What is the purpose of Purchase Organization in SAP MM?

Ans. Remember following points related to purchase organization:

• All the procurement activities are executed under the umbrella of Purchase organization.
• All the negotiations on various conditions with suppliers are done at purchase organization level.
• A purchase organization can procure (or negotiate pricing conditions) for all company codes or a single company code and negotiates price and conditions of a material with supplier where it is being assigned.
• A purchase organization can also procure (or negotiate price conditions) material for plants where it is assigned.
• There are standard SAP Fiori reports available to monitor and track purchase activities at purchase organization level
• Procurement overview is a Fiori dashboard report (16 Fiori Cards) where we can fetch purchase reports (KPIs) at Purchase orgnization level

2. What is reference purchase organization in SAP MM? What is its use?

Ans. First of all do not try to remember the definition if reference purchase organization otherwise you will be confused and not able to conduct client workshop. Always explain reference purchase organization with the help of a business example.

For example:

• There is a company with several manufacturing plants and each plant has a local purchase organizations.
• Now if the company wants to do price negotations for buying Laptops, printers and mouses centrally and want each purchase organization to use the same price then they will use reference purchase organization.
• Reference Purchase organization will negotiate a comprehensive contract with a good price for Laptop, printers and mouses with supplier DELL.
• The other local purchase organizations can create release orders (PO) to buy laptop, printer and mouses with reference to the Contract create for Reference Purchase organization.

3. What are the pre requisites to use reference purchase organization in SAP MM?

Ans. To use reference purchase organization we need following configuration set up in SPRO:

• The purchase organization must be created in enterprise structure in SPRO
• The reference purchase organization must be created in enterprise structure in SPRO
• The purchase organization should be assigned to reference purchase organization in Enterpise structure in SPRO
• If you will not do the above assignment then user will not be able to create release order (PO) with reference to the comprehensive contract created by reference purchase organization
• Other than above setting we need material master and supplier master in place

4. Purchase group is assigned at to which organization element? Plant or purchase org or company.

Ans. Purchase group is not assigned to any organization element. It is a standalone organization element which represents buyer in purchase activities.

5. Suppose there is a storage location which is no longer in use or two storage locations merged into one storage location then what are the options available in SAP to handle such situation?

Ans. There can be such situations when we cannot delete the storage location because lot of transactions are already posted in SAP and we do so then it may result into a data inconsistency in data base. Therefore there is an option in SPRO where we can put a validity indicator. There are three options available. Please see below table to understand the impact of each storage location indicator:

S. No.	Indicator	Details
1	Blank -> Valid	It is a normal case when storage location is functional
2	E -> No longer valid	1. If we put this indicator then storage location will be invalid 2. Storage location will not appear in input drop down list (F4 help) 3. If user enters the storage location manually then system will throw an error message
3	W -> Deprecated	1. If we put this indicator then storage location will be invalid (deprecated) 2. Storage location will appear in input drop down list (F4 help) 3. If user enters the storage location manually in any transaction then system will throw a warning message

Others

Can you post physical inventory document for a new material in SAP or movement type 701 in SAP MM?

Ans. No you cannot. There should be at least one transaction posted for that material such as 561 or 101. Then only that material will be considered in physical inventory.

What is the prerequisite to create a source list?

Ans. Purchase info record must be created before we create a source list. Even if you try to create source list without purchase info record system will give you a message.

Which movement type is used for scrapping?

Ans. We can use movement type 551 for scrap process.

Suppose user wants to create a PO with alternate unit of measurement but system gives a message that purchase can be done only in the unit which is maintained in purchase view of material master? What will you do in such situation?

Ans. In order to create a purchase order in alternate unit of measurement we need to activate the field “variable purchase order unit“. Once this field is maintained with value ‘1‘ the purchase order can be created with alternate unit of measurements also.

What are different types of procurements?

Ans. There are three types of purchase:

1. Direct Purchase
2. Indirect Purchase
3. Service Purchase

Note: Generally people forget to include Service purchase while answering above question.

Suppose the warehouse received a material without PO on emergency basis and 501 movement is posted. Now how will you post invoice receipt? There is no PO.

Ans. This kind of issue can be solved in two ways:

1. User can post FB60 and create a vendor invoice and proceed further.
2. User can create a PO later on, cancel 501 movement posted and post a fresh GR with 101 movement type and ask supplier to send an invoice with reference to the PO.

Do not recommend to enter the bill of lading while posting 501 movement type because bill of lading field is removed from screen while posting GR with PO.

Is there any limitation on the creation of number of POs, PRs, GR posting and invoice postings in SAP?

Ans. Yes, there is limitation. Please read below points carefully.

• Once the number range is consumed we cannot create the documents any more. We need to archive the documents then only we can create new one.
• PR and PO items are limited to 99,999 items, because the item number has a maximum length of 5 digits.
• Also while posting invoice we can post only 999 items in one invoice. Afterwards, we have to post a new invoice. To overcome the 999 item limitation in invoice item, you can activate Extended Open Item Management.

You have created a PR and entered a PR text in PR item. This text contains some important information related to the material you want to purchase. This item text should be copied to PO item text also but it is not happening. How will you solve such issue?

Ans. There is a configuration in PR and PO where we can set the copy rules. Please check below path in SPRO:

Material Management > Purchase > Purchase order > Text for Purchase order > Define copy rules for item text

The unit of measurement related conversion is well maintained in the purchase info record but still the conversion is not working while creating purchase order?

Ans. The purchase order will take the Order unit which is maintained in Purchase tab of material master. If you want the purchase info record UoM conversion factor to work then you have to maintain the unit of measurement conversion in material master additional data also.

In SAP S4 HANA how can we generate a PR from MRP with automatic assignment of supplier in PR without source list?

Ans. In the Purchase Info record there is a check box auto sourcing. If this check box is ser then the vendor will auto popiulate in PR triggered from MRP. No need to maintain the supplier in source list with MRP indicator.

What is the purpose of GR/IR account in SAP?

Ans. The GR/IR account is used to show the temporary liability in system. Normally when we buy any goods from market then accounts entry goes like this -> Inventory Account Debit and Vendor Account Credit. But we do not receive the invoice by that time so we create a temporary liability in GR/IR accoiunt and this account entry gets cleared or reversed when we post invoice in system.