SAP MM Interview Questions: Insights on Material Management

sap mm interview questionsSAP business application has several modules pertaining to the various functions in the organization. The SAP Material Management (MM) module is used for the entire supply-chain management, ranging from materials procurement, vendor management and inventory management to planning activities like consumption-based planning etc. It is the most important module for the day-to-day operations of a business and is closely related to the Finance, Production Planning, Quality Management and Sales & Distribution modules of SAP application. The SAP MM supports various activities like purchasing, goods receiving, invoice verification, quality control, inventory management and vendor evaluation etc. and is fully integrated with the other modules of SAP R/3. You can learn more about SAP and how the various modules come together in this course.

If you are a material or production manager, a quality management professional or a business executive, you will find that SAP MM brings a lot of convenience to the overall manufacturing operations and automates several procedures that increase organizational efficiency by many folds.

What is SAP MM?

SAP MM (Material Management) is the module that supports the procurement activities in an organization right from the planning and purchasing to inventory management and quality control. This module has several features and functionalities that are fully integrated with the other important modules like Finance and Control, Sales and Distribution, Production Planning etc. The procurement process consists of a chain of events that take place in order. Starting from the creation of a Purchase Requisition (PR), it moves to the authorization of PR and creation of a Purchase Order (PO). Subsequently, the Goods Receipt is generated on receipt of the goods ordered, Invoice Verification takes place and the Quality Control activities are set in motion. Thereafter, the payment is sent to the vendors for their goods /services.

The SAP MM sub-modules are – Material Planning, Purchasing, Inventory Management, Vendor Evaluation, Invoice Verification and Statutory Requirements. Get an in-depth knowledge on the SAP MM module, its functions and sub-modules in our  course on SAP Material Management (MM).

Benefits of SAP MM

With customer demands changing rapidly, an organization’s efficiency is measured primarily by its ability to cater to the market demands in the shortest time possible. For this to happen, the business has to have stock of the required raw materials at the right time and must be able to use it efficiently. A proper Material Management process ensures that there is never a shortage of materials or any gaps in the supply chain process of the organization. The SAP MM automates the procurement and material management activities to make the processes smoother and effective. Some prominent benefits of SAP MM are:

  • Reduces material costs by avoiding stocking of unnecessary or obsolete materials
  • Inventory losses are minimized
  • Direct labour costs are reduced and labour can be used efficiently
  • Manufacturing cycle times are reduced and can be controlled effectively
  • Effective inventory management and reduces expenditure on unwanted material storage
  • Improves delivery time and increases transparency across the organization

You can learn more about how SAP MM can benefit you in this course.

Challenges for Implementation

While the benefits of SAP MM outweigh the challenges faced in its implementation, organizations must be prepared to dedicate their time and ensure that these challenges are overcome:

  • Information on the material requirements, planning activities and order inputs must be managed carefully and should be reflected correctly for the module to be accurate
  • Proper forecasting methods should be followed so that materials planning and demand forecast is in line with the manufacturing requirements
  • Quality control methods should be integrated properly to ensure that the product quality is maintained up to standards
  • Vendors must be selected carefully to suit your quality management principles. This not only safeguards the end-product quality but also the reputation of your company

We’re sure you’re intrigued by this over view. But before you run to bad that SAP position, here are some basic questions you must know before that interview.

SAP MM Interview Questions

  1. What are the various functions /features in Purchasing?
    The purchasing view consists of RFQ / Quotation, Purchase Requisition (PR), Purchase Order (PO), Master Data that has several fields like info record, source list, conditions, vendors etc. and finally Outline Agreements.
  2. What are the different kinds of special stocks available?
  3. Special stocks available are consignment stocks (from vendor), subcontracting stocks (to sun-contractor), project stocks, pipeline materials, sales order stocks, stock transfer and third party.
  4. How do you create a pricing procedure?
    The steps involved in creating a pricing procedure are:
    1. Create condition tables 2. Create access sequence according to the various condition tables 3. Create condition types 4. Assign access sequence to condition type 5. Create the pricing procedure 6. List down all the condition types in order so as to suit the business and pricing requirements. Learn  more about these in our SAP FI course.
  5. How does the consignment cycle operate?
    The various steps in consignment cycle are:
    1. Create consignment info record with proper tax code 2. Create Purchase order with item category K 3. Create output condition record for KONS (output type) 4. Authorize Goods Receipt (GR) 5. Payment is settled through MRKO transaction even if invoice verification is not done
  6. What are the kinds of info records available?
    Standard, consignment, subcontracting and pipeline
  7. What is the difference between a contract and scheduling agreement?
    While a scheduling agreement is for consignment, subcontracting and stock transfer, a contract is for Standard items and can be limited to a certain quantity or value.
    A contract can be created centrally with different pricing conditions for every plant whereas a scheduling agreement needs to be created at that particular plant location. In a contract, only time-dependant conditions can be created whereas in a scheduling agreement, you can have time-dependant or time-independent conditions subject to the customizations in the document type. 
  8. What is MRP? And how is Lot Size used?
    MRP is short for Materials Requirements Planning and it is a production planning technique that’s used to manage the manufacturing process. It is basically used to determine your Material Planning procedure by specifying the various conditions like Reorder Point, Seasonal Requirement, Replenishment, Vendor Managed, Forecast Based and Master Production Scheduling (MPS). Lot size specifies the nature of material requirement in terms of Weekly, Monthly, Quantity and Maximum Replenishment. You can learn more about inventory management with our SAP Warehouse management course.
  9. What are batches and how are they searched?
    A batch is a collection of similar items from your stock that have the same characteristics. For example, all food items produced on a particular day belong to one batch.
    Batches are searched using the standard facility (match code, key F4) based on the batch names or other properties that distinguish them from others.
  10. How is shelf-life managed in SAP? Explain the full-cycle.
    In SAP, there are basically two types of shelf-life:
    1. Total Shelf Life – In case the total shelf life is maintained, then it’s mandatory to enter the minimum shelf life also. During the process of Goods Receipt (GR), the user will have to enter the manufactured date of the item so that the expiry date is automatically calculated by the system.
    2. Minimum Shelf Life – The date of minimum durability of the item are specified by using date markings like ‘use-by’ or ‘best-before’. During the process of Goods Receipt (GR), the user will have to enter the date of GR so that the system can check if the material is usable according to the requirements in material master. If the minimum remaining shelf life condition is not satisfied, then the system will not accept the goods receipt.
  11. What is a release strategy? What are release groups and codes?
    The procurement process in SAP needs to be controlled by introducing authorizations at important stages. This is taken care by the release strategy, which has different codes for assigned users. For example, if the value of a PO is more than a certain pre-defined limit, then it has to be approved by the SCM manager with a certain release code. Every company will have different approval mechanisms and the release strategy can be defined by the users.
    Release groups are a set of release codes that are used for authorizing a purchasing document or approving a release strategy. Release code is a 2-character ID that allows a person to approve or clear a PR or a PO and they are controlled by a step-by-step authorization system. For example, Code 10 is assigned to the person who creates the PO, Code 20 is the release code assigned to the Purchase manager for approval. Subsequently, the Department Head will use Code 30 to approve the release strategy, followed by the Operations Director, who will use Code 40 for final approval.
  12. What is a GR blocked stock and when is it used?
    The GR blocked stock is an option used in the goods receipt process when you are not sure about the quality of the goods received. In such a case, the stock is maintained as GR blocked either from a material viewpoint or exclusively for a purchase order item.

The SAP MM module is a very powerful application that can make your procurement and planning activities smoother, increase efficiency and shorten delivery cycles significantly. Note that this is just part of the entire SAP framework. Do take this SAP course to understand other ways SAP can help provide the best ERP solution. (And on a side note, you may want to also work on your interviewing skills. This course can help you get into interview mindset and equip you with the strategies to ace that interview!