SAP MM Interviews Series – Part 2

Do checkout this commonly asked SAP MM Interview Q/A Series and prepare for your interviews easily. This is Part 2 of 10 Part Series.

SAP MM Interviews Question Series

1. Explain Procurement Lifecycle in SAP MM?

Ans: Procurement lifecycle includes all the steps from finding a requirement or need for a material or a particular service till the end of paying the invoice or payment to the vendor.

Determination of the requirement which includes identifying the requirement for the service or a product & then creating an internal document specifying the materials, the quantity which is required as well as the desired date when the material or service is required. This step is known as purchase requisition document. It is also called as MRP – Material Requirements Planning.
Request for Quotation (RFQ) is being created then. Here potential existing vendors are being identified or by connecting with the new suppliers. RFQ is being sent to multiple vendors asking for prices and terms of conditions.
The quotations received from the vendors are being compared then using price, quantity, quality, payment terms, delivery timings etc. Most finest vendor is being identified then.
Then a purchase order (PO) is being created, which is basically a formal document consisting of all the terms & conditions are being issued to the finalized vendor. The PO is basically a binding term. PO Monitoring is also being done, so that it wont get delay.
The delivery happens then. Upon delivery, the GR – Goods Receipt is being created. Quality & Quantity is being accessed then. GR Posting happens. Here the receipt of the goods are being recorded in the SAP System.
Next step is invoice verification where vendor sends an invoice for the goods he delivered. Vendors invoice is being matched with GR and PO both. The quantity and price is being cross checked here.Once verified, invoice is being posted to SAP System.
Last step is payment processing to the vendor. Here scheduling payments & financial records are being updated in SAP FI system. Vendors account is cleared once payment and complete lifecycle of procurement is done.

2. Can we change the standard price in Material Master Data?

Ans: Yes, the standard price can be changed. This price is basically set in material master record under the accounting view section. Standard price is used for inventory valuation and cost accounting. We can use Tcode MM02 to change the standard price in Material Master data. In MM02, after giving complete information, in Accounting 1 view, we can change the Standard Price field with the new prices. Changing the standard price will also affect the valuation so we should be cautious while doing it.

3. When do you consider using Source List?

Ans: This list is used to consider procurement processes. When a particular material is being ordered from different vendors at different time intervals, then that information maintained is known as source list. Source list can tell us the source of supply for a specific material. Check whether the procurement is internal or external. Vendor Management can be done easily. Speed up the purchase process as quick access to all the details is available. It can be maintained in ME01 Tcode.

4. Why invoice verification is required in SAP MM?

Ans: It is one of the most important step in the procurement process which checks the supplier invoices & their correct accuracy before making the payments. It is one of the most important process for maintaining the financial accuracy. invoices & their correct accuracy before making the payments. Invoice Verification helps in providing accuracy in financial records. It prevent errors in the financial statements by doing proper verification of the amounts and the quantities. Duplicate payments can also be identified using invoice verification steps. This process also helps in compliance and control in SAP MM as well as cost management in terms of prices. Maintaining good supplier relationships can be done through accurate & timely payments.

5. Explain what is ERS ?

Ans: It is Evaluated Received Settlement. It is a process which involves evaluation of goods received first & then settling down the payments based on the evaluations. This way it helps in efficient procurement process by reducing the discrepancies between different orders, invoices and the deliveries.

Hope you like SAP MM Interviews Series PART – 2

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