SAP SAP MM Syllabus

What is an RFQ (Request for Quotation) in SAP MM?

An RFQ is a document sent by a purchasing organization to vendors inviting them to submit a quotation (price and conditions) for supplying a material or service by a specified date. It is the invitation part of the bidding process.

What is a Quotation in SAP, and how does it relate to the RFQ?

A Quotation is the vendor's reply to an RFQ, stating prices, terms, and delivery conditions. In SAP the RFQ and Quotation share the same document; the buyer maintains the vendor's prices/conditions into the RFQ to record the quotation.

What is a Price Comparison (bid evaluation) in SAP purchasing?

After quotations are entered, the Price Comparison List (transaction ME49) compares quotations from different vendors using criteria such as price, delivery time, and terms, helping the buyer select the most favorable vendor and reject the others (rejection can send a rejection letter).

What is a Purchase Order (PO) in SAP MM?

A Purchase Order is a formal, legally binding external document issued by a purchasing organization to a vendor requesting delivery of materials or performance of services at agreed prices, quantities, and dates.

Name the common item categories used in a Purchase Order.

Standard (blank), K (Consignment), L (Subcontracting), U (Stock Transfer), D (Service), B (Limit/blanket), and T (Text item).

List the main account assignment categories in a PO and what they mean.

K = Cost Center, F = Order (internal/production order), A = Asset, P = Project (WBS element), and blank = stock material (no account assignment, posts to inventory).

What is an Outline Agreement in SAP MM, and what are its two types?

An Outline Agreement is a longer-term arrangement with a vendor to supply materials/services under agreed conditions over a period. The two types are Contracts and Scheduling Agreements.

What are the two types of Contracts in SAP MM Outline Agreements?

Quantity Contract (agreement is fulfilled when a total agreed quantity is reached) and Value Contract (agreement is fulfilled when a total agreed value/amount is reached).

How does a Scheduling Agreement differ from a Contract?

A Scheduling Agreement is an outline agreement in which deliveries are specified through delivery schedule lines (dates and quantities), so goods are called off against the schedule without separate POs. A Contract requires release orders (contract release orders/PO with reference) to call off quantities or value.

What is a Release Order in the context of a contract?

A Release Order (contract release order) is a purchase order created with reference to a contract to call off a portion of the agreed quantity or value. The system records the release documentation showing how much of the contract has been consumed.

What is a Goods Receipt (GR) in SAP MM, and what does it trigger?

A Goods Receipt is the posting of incoming goods (usually against a PO) into stock. It updates stock quantity and value, creates a material document and an accounting document, updates PO history, and can create a Material Document and trigger a possible message/output.

What is the standard movement type for Goods Receipt against a Purchase Order?

Movement type 101 (goods receipt for purchase order into warehouse/stores). Its reversal/cancellation is movement type 102.

What accounting entry is generated at Goods Receipt for a standard stock PO?

Inventory (stock) account is debited and the GR/IR (Goods Receipt/Invoice Receipt) clearing account is credited. For a material valued at moving average price, the inventory value increases; the GR/IR account is later cleared during invoice verification.

What is the GR/IR (Goods Receipt/Invoice Receipt) clearing account?

The GR/IR account is an intermediate/clearing G/L account that bridges goods receipt and invoice receipt. It is credited at GR and debited at invoice posting, ensuring goods received but not yet invoiced (and vice versa) are tracked and eventually cleared to zero.

What is a Goods Issue (GI) in SAP MM?

A Goods Issue is the removal/withdrawal of stock from inventory, reducing stock quantity and value. It is posted for consumption to a cost center, production order, scrapping, sampling, or delivery to a customer, and creates material and accounting documents.

Give common Goods Issue movement types and their purposes.

201 = GI to cost center, 261 = GI to order (production/maintenance), 551 = GI scrapping, 601 = GI for delivery (to customer/SD), and 231 = GI for a sales order. Reversals typically use the movement type plus 1 (e.g., 202, 262).

What is a Stock Transfer in SAP MM, and what are its types?

A Stock Transfer is the physical movement of stock from one location to another. Types: storage-location-to-storage-location, plant-to-plant, and company-code-to-company-code. It can be done as a one-step or two-step procedure, or via a Stock Transport Order (STO).

Differentiate a Stock Transfer from a Transfer Posting.

A Stock Transfer involves the physical movement of goods from one location to another (e.g., plant to plant). A Transfer Posting is a change in the stock identity/status without necessarily a physical movement (e.g., quality inspection to unrestricted, consignment to own stock, or material-to-material).

What is a Stock Transport Order (STO)?

A Stock Transport Order is a purchase-order-based method for transferring stock between plants (or company codes). It can include delivery (SD), billing, and can plan transport costs, giving better monitoring than a simple one-step MB1B transfer.

What is a Reservation in SAP MM?

A Reservation is a request to the warehouse to keep (reserve) a specified quantity of a material ready for withdrawal at a later date, or for a receipt. It ensures material availability for a planned goods issue/receipt and is considered in MRP and availability checks.

What is the movement type for a manual reservation for goods issue to a cost center?

Movement type 201 is typically referenced. The reservation itself is created (e.g., MB21) and specifies the movement type for the intended goods movement, such as 201 for goods issue to a cost center or 261 for a production order.

What is Physical Inventory in SAP MM, and what are its main methods?

Physical Inventory is the process of counting on-hand stock to reconcile book quantity with actual quantity. Main methods: Periodic Inventory (all stocks counted on a key date), Continuous/Perpetual Inventory (counts spread throughout the year), Cycle Counting (counted by ABC frequency), and Inventory Sampling (statistical sampling).

What are the main steps of the Physical Inventory process in SAP?

1) Create the physical inventory document, 2) Print and carry out the physical count, 3) Enter the counted quantity into the system, and 4) Post the inventory differences (analyze and clear differences against a G/L expense/revenue account).

What is Cycle Counting in Physical Inventory?

Cycle Counting is a method where materials are counted at regular intervals during the year based on their cycle-counting indicator, usually derived from ABC analysis, i.e., high-value/fast-moving A items are counted more frequently than C items.

What is Invoice Verification (Logistics Invoice Verification) in SAP MM?

Invoice Verification is the final step of procurement where the vendor's invoice is checked against the PO and goods receipt for quantity and price. On posting, it creates an accounting document, updates the vendor liability, and clears the GR/IR account. It links MM and FI.

What is Three-Way Matching in invoice verification?

Three-Way Matching compares three documents before an invoice is paid: the Purchase Order (agreed price/quantity), the Goods Receipt (quantity received), and the Vendor Invoice (billed price/quantity). Only when the three agree (within tolerance) is the invoice posted without a block.

What accounting entry does invoice posting generate for a standard PO?

The GR/IR clearing account is debited and the Vendor account is credited (with tax posted to the tax account). Any price difference (moving average) posts to stock or a price difference account. This clears the GR/IR that was credited at goods receipt.

What is an invoice block, and what causes it in SAP?

An invoice block prevents payment until differences are resolved. It is triggered when an invoice exceeds tolerance limits, e.g., price variance, quantity variance, or date/quantity/amount deviations. Blocked invoices are released manually or automatically (MRBR) once issues are cleared.

What is a Subsequent Debit and a Subsequent Credit in SAP MM invoice verification?

A Subsequent Debit is posted when a vendor charges an additional amount for a previously invoiced material (increasing value, no quantity change). A Subsequent Credit is posted when the vendor grants a credit/reduces the value of a previously invoiced material (decreasing value, no quantity change). Both change value only, not quantity.

What is Moving Average Price (MAP / price control V) versus Standard Price (price control S)? Give the MAP formula.

With price control S (Standard Price), the material is always valued at a fixed standard price and variances post to a price difference account. With price control V (Moving Average Price), the value changes with each receipt: $$\text{MAP} = \frac{\text{Total Stock Value}}{\text{Total Stock Quantity}}.$$ After a new receipt, $\text{New MAP} = \frac{\text{Old Value} + \text{Receipt Value}}{\text{Old Qty} + \text{Receipt Qty}}.$