SAP MM Interview Questions and Answers

If you’re preparing for an SAP MM (Materials Management) interview, you’re not alone. MM is one of the most in-demand modules in SAP because every business, big or small, needs to buy, store, and manage materials. Whether it’s a fresher interview or an experienced role, you can expect a mix of technical questions and practical scenarios.
In this guide, I’ve pulled together the most common SAP MM interview questions, starting from the basics and moving into advanced topics. The goal is simple: help you understand the concepts clearly so you can explain them confidently during interviews.

Table of Contents:

• SAP MM Interview Questions for Freshers
• SAP MM 3 years Experience Interview Questions
• Advanced SAP MM Interview Questions
• Practical Scenarios SAP MM Interview Questions
• Conclusion

SAP MM Interview Questions for Freshers

These are the foundational questions interviewers ask to check your understanding of SAP MM concepts, processes, and basic terminology. They are perfect for freshers and those preparing for entry-level SAP MM roles.

1. What is SAP MM, and how does it support procurement and inventory management?

SAP MM (Materials Management) is SAP’s module that allows companies to handle everything that they buy, store, and use. You can think of it as the control center for procurement and inventory.

SAP MM helps companies:

• Automate the buying process
• Track stock levels in real time
• Maintain accurate valuation of materials
• Stay fully connected with Finance and Controlling

2. How is a Purchase Requisition different from a Purchase Order in SAP MM?

A Purchase Requisition (PR) is used as an internal note within the company. Think of it as one department of the company saying, “We need this material or service”. It is not sent anywhere outside the company and only signals a demand.

A Purchase Order (PO), on the other hand, is an official document that goes out to a vendor, which defines exactly what is being purchased and under what conditions. A PO is a binding legal agreement between the company and a vendor.

3. What are the core master data elements in SAP MM, and why do they matter?

Master data is essential in SAP MM to ensure that transactions flow correctly. The 3 main ones are:

• Material Master: Holds all the details about every material that the company currently holds. This includes description, unit of measure, and even stock levels.
• Vendor Master: The Vendor Master holds all the information about suppliers including payment terms and contract details.
• Purchasing Info Record: Links a material with a vendor and includes a track of pricing and delivery conditions.

4. What is a Source List in SAP MM, and how does it streamline vendor selection?

A Source List acts like an approved vendor directory for each material. It tells the system which suppliers are allowed, and during what period.

This matters because it keeps unapproved vendors out, enforces procurement policies, and even lets SAP automatically assign vendors to Purchase Requisitions. It keeps purchasing efficient, controlled, and policy-driven.

5. Can you walk me through the different procurement types in SAP MM?

SAP MM doesn’t treat all buying the same way. There are different procurement types, each designed for a specific scenario:

• Standard Procurement: Buying directly from external vendors.
• Consignment Procurement: Materials sit in your warehouse but still belong to the vendor until consumed.
• Subcontracting Procurement: You send raw materials to a vendor, and they return finished goods.
• Stock Transfer: Moving stock between plants or storage locations inside the same company.

Each type exists because businesses don’t buy everything the same way. SAP MM gives flexibility to cover all real-world procurement scenarios.

6. What are movement types in SAP MM? Can you share some examples?

Movement types are SAP’s way of recording how materials move in and out of inventory. Each type has a code that defines what’s happening.

Example:

• 101: Goods receipt for a purchase order.
• 201: Goods issue for cost center consumption.
• 301: Transfer posting from one plant to another.

7. What is a Material Valuation Class, and how does it work?

The valuation class acts as the link between materials and the General Ledger in Finance. It tells SAP which account to post to when materials are received or consumed.

For example:

• Raw materials might go to one G/L account.
• Finished goods might go to another.

This ensures financial postings are automatic and accurate every time materials move.

8. How do release strategies work for purchase requisitions in SAP MM?

A release strategy is nothing but an approval process. When a Purchase Requisition is created, SAP checks it against rules like value, department, or material type, then routes it for approval.

For instance:

• A low-value PR might need just a manager’s approval.
• A high-value PR could require approval from senior management.

This keeps spending under control and ensures compliance with company policies.

9. What exactly is consumption-based planning in SAP MM, and why is it used?

Consumption-Based Planning (CBP) makes procurement smarter by using past consumption data instead of guesswork. The system looks at actual usage patterns and helps plan what’s needed.

It’s useful because:

• It reduces overstocking.
• Ensures critical materials are always available.
• Cuts down on manual planning efforts.

Instead of relying on gut feel, CBP looks at actual consumption history and predicts future needs. The result? Less overstock, fewer surprises.

10. What are the different stock types in SAP MM, and how are they managed?

Not all stock in SAP is ready to use. The system divides stock into categories so businesses know what’s available and what isn’t:

• Unrestricted Stock: Free to use for production or sales.
• Quality Inspection Stock: Held until quality checks are complete.
• Blocked Stock: Not usable until issues are resolved.
• Stock in Transit: Materials moving between plants or storage locations.

SAP MM 3 years Experience Interview Questions

Here are some SAP MM interview questions that are more geared towards an experienced professional.

11. What is the difference between a contract and a scheduling agreement in SAP MM?

While both contracts and scheduling agreements are long-term purchasing agreements, they differ in terms of purpose.

• Contract: You can think of this as a broader agreement with a vendor for a defined quantity or value over a specific period of time. Purchase Orders(PO) must still be created against the contract whenever materials are required.
• Scheduling Agreement: A more automated and structured option where exact delivery dates and quantities are specified in advance. The Vendor delivers as per the predefined schedule without the need to draft a PO for each delivery.

12. Explain the subcontracting process in SAP MM.

Subcontracting is a procurement process wherein companies provide materials to a vendor, and they, in turn, deliver a finished product back to you.

The process in SAP MM typically involves these steps.

1. Create a Subcontracting Purchase Order: This PO will specify the finished product to be received and the components that will be issued to the vendor
2. Issue Raw Materials to Vendor: The required materials are delivered to the subcontractor and tracked in the system as “Stock with Vendor”.
3. Vendor Delivers Goods: The subcontractor returns the finished goods
4. System Adjustments: Upon goods receipt, SAP MM automatically records consumption of the issued components and updates stock levels of the finished goods.

You’ll mostly see this in automotive or electronics, though honestly, almost every manufacturing setup uses it at some point.

13. What is consignment stock, and how is it managed?

Consignment stock refers to materials that are physically available in the company’s warehouse but are still owned by the vendor until they are actually consumed.

• No upfront payment: The company does not pay the vendor when the goods are delivered.
• Separate stock tracking: Consignment stock is managed and tracked separately in the system.
• Payment on consumption: The vendor is paid only when the materials are used in production or consumed in some other manner.
• Business benefit: This approach reduces carrying costs while ensuring material availability.

14. What is the significance of the Posting Period in SAP MM?

The Posting Period defines the financial period in which material or accounting entries can be posted.

• It prevents backdating or future-dating of transactions.
• Ensures that inventory and financial books stay aligned.
• Posting periods are controlled by Finance, but directly impact MM since every goods movement has a financial entry.

Without proper posting period control, companies risk financial misstatements.

15. How does SAP MM handle split valuation?

Split Valuation allows a company to value the same material differently based on certain criteria, such as origin, grade, or procurement type.

For example:

• Imported steel might have a higher value than locally purchased steel.
• New stock might be valued differently from returned/repaired stock.

SAP MM supports this by assigning valuation types under a common material, ensuring accurate financial reporting.

16. What is the difference between GR, IR, and LIV in SAP MM?

There are mainly three important steps in the procure-to-pay process in SAP MM.

• Goods Receipt (GR): When materials arrive from the vendor, the receipt is recorded in the system. This updates inventory levels and creates an accounting entry.
• Invoice Receipt (IR): The vendor’s invoice is entered in SAP. This records the liability and compares the invoice details against the purchase order.
• Logistics Invoice Verification (LIV): The system performs a three-way match between the purchase order, goods receipt, and invoice. This step ensures that the quantity, price, and terms are consistent before payment is released.

17. What is RTP (Returnable Transport Packaging), and when is it used?

RTP refers to packaging material (like pallets, containers, crates) that is reusable and must be returned to the vendor.

SAP MM tracks RTP so that:

• Vendors don’t lose their packaging assets.
• Companies don’t accidentally expense packaging as consumables.

This is common in industries like beverages, chemicals, or automotive, where returnable packaging reduces costs and waste.

18. What are the different types of info records in SAP MM?

SAP allows for different types of info records depending on the procurement scenario. There are mainly four types.

• Standard Info Record: Used when you are buying materials directly from the vendor.
• Subcontracting Info Record: When you are sending raw materials to the vendor, and the vendor in turn delivers finished goods.
• Consignment Info Record: Only used for consignment procurement scenarios.
• Pipeline Info Record: Solely for materials supplied via pipelines.

19. How does SAP MM handle batch management?

In many industries like pharma, food, or chemicals, it is not sufficient to track materials only at the item level. Regulations often require traceability down to smaller groups called batches.

With batch management in SAP MM, each batch gets a unique ID along with other important information such as manufacturing date, expiry, or quality grade. This allows companies to trace sold items to the exact batch it was made from.

Batch processing comes in most handy during quality checks or recalls. Instead of touching the entire stock, companies are able to identify and rectify just specific batches. This saves an immense amount of time and cost.

20. What is service procurement in SAP MM?

As you may already know, services cannot be physically stocked like other goods. This is where Service Procurement in SAP MM helps. It allows the company to manage the purchases of services like maintenance, consulting, or even facility management. Here are the key steps involved.

• Create a service purchase order
• Record service entry sheets when work is done
• Approve and post the service entries
• Proceed to invoice verification and payment

This ensures even intangible items are tracked with the same rigor as physical goods.

Advanced SAP MM Interview Questions

Let’s now explore some advanced SAP MM interview questions that discuss more complex concepts.

21. How does the OBYC configuration work in SAP MM?

OBYC is the heart of automatic account determination in SAP MM. It is responsible for making sure the right General Ledger accounts are updated in the background when goods move.

For example, when you post a goods receipt, it decides which G/L account to debit for inventory and which to credit for GR/IR. This is driven by transaction keys and valuation classes that classify materials.

22. What is the valuation grouping code in SAP MM, and why is it important?

The valuation grouping code allows you to group plants that have similar valuation rules. Rather than defining account determination for each plant individually, you can assign multiple plants to one valuation grouping. This approach cuts down on redundancy and ensures that similar materials receive consistent accounting treatment across plants. It acts as a shortcut to keep your system organized and your financial postings uniform.

23. How do you configure a release strategy in SAP MM?

Release strategies control approval workflows for purchase requisitions and purchase orders. You configure them by defining:

• Release codes: who can approve.
• Release groups: which documents fall under which workflow.
• Conditions: like document value, plant, or material group.

Once set up, a PR or PO cannot proceed until all required approvals are completed. It’s your digital gatekeeper, ensuring control and accountability in procurement.

24. What are account assignment categories in SAP MM?

Account assignment categories determine where the costs of a material or service are posted. Examples include:

• K – Cost center
• F – Order
• P – Project
• A – Asset

By selecting the right category, SAP knows which G/L accounts to debit, aligning procurement with your organization’s cost structure.

25. How do you configure tax procedures in SAP MM?

Tax procedures define how taxes like VAT, GST, or sales tax are calculated on purchases. Configuration involves:

• Assigning tax codes to materials and vendors.
• Setting calculation rules, whether tax is included or added on top.
• Linking with the country and company code so the system automatically applies the correct tax.

This ensures compliance and eliminates errors during invoice verification.

26. What are the differences between external and internal procurement?

• External Procurement: You buy goods or services from a vendor outside your company. Think of purchase orders, contracts, and deliveries from third parties.
• Internal Procurement: You source materials from another plant or company code within the same organization. It’s more like inter-company transfers, keeping everything on the books but internal.

27. How is automatic account determination handled in SAP MM?

Automatic account determination ensures that every material movement posts to the correct financial accounts. It works through:

• Valuation class (categorizes materials)
• Transaction key (defines the type of posting, e.g., stock, GR/IR, price differences)
• OBYC configuration (maps valuation classes and transaction keys to G/L accounts)
• The result: seamless integration between MM and FI, with no manual postings needed.

28. How does SAP MM integrate with FI, SD, and PP modules?

• FI (Financial Accounting): Every goods receipt, invoice, or stock change automatically updates G/L accounts.
• SD (Sales and Distribution): MM ensures stock availability for sales orders and coordinates delivery schedules.
• PP (Production Planning): MM provides materials for production orders and manages consumption and inventory.

Integration keeps all modules in sync, so procurement, finance, and production talk to each other without friction.

29. What are special procurement types in SAP MM?

Special procurement handles materials that don’t follow the standard buy-and-store process. Examples include:

• Consignment: goods owned by the vendor until used.
• Subcontracting: sending materials to a vendor for processing.
• Stock transport orders: moving stock between plants.
• Pipeline handling: materials delivered directly from a pipeline (water, gas, oil).
• Special procurement ensures flexibility and accuracy in complex supply chains.

30. How does SAP MM handle invoice verification?

Invoice verification is the checkpoint between procurement and finance. SAP MM matches:

• Purchase Order: what was ordered
• Goods Receipt: what was received
• Invoice: what’s being billed

The system performs a three-way match, flags discrepancies, and posts the verified invoice to FI. This guarantees accurate payments, updates inventory valuation, and ensures vendors are paid correctly. Think of it as quality control for your invoices.

Practical Scenarios SAP MM Interview Questions

Interviewers always ask scenario-based SAP MM interview questions to check if the candidate is able to convert theoretical knowledge into practical, real-world solutions.

31. How do you troubleshoot blocked invoices in SAP MM?

Blocked invoices usually happen when there’s a mismatch in the three-way match (PO, GR, Invoice). I would:

• Check if the invoice price is higher than the PO price.
• Verify if the quantity billed exceeds the goods received.
• Review tolerance limits set in customizing.

Once the root cause is identified, I either correct the PO, process a credit memo, or release the blocked invoice through MRBR (depending on business rules).

32. How would you resolve issues with mismatched GR/IR accounts?

A mismatch in GR/IR happens if goods are received but invoices aren’t, or vice versa. To fix:

• Run GR/IR clearing reports to see open items.
• Post missing GR or invoice if it’s a timing issue.
• If it’s an error, use adjustments or clearing entries in FI after investigating with Finance.

The idea is to always keep GR/IR in balance; goods received should eventually match invoices posted.

33. Can you explain the third-party procurement process in SAP MM?

Third-party procurement is when your company doesn’t receive the goods. The vendor ships directly to the customer. Here are the steps that are involved.

• Sales order in SD triggers a purchase requisition.
• That PR is converted to a PO for an external vendor.
• Vendor delivers goods directly to the customer.
• The vendor invoice comes to us, and we settle it.

SAP ensures the cost is passed to the customer while keeping your inventory untouched.

34. How do you manage vendor evaluation in SAP MM?

Vendor evaluation is handled via criteria like quality, delivery, price, and service. SAP allows you to assign scores to each criterion. These evaluations are updated automatically (based on actual transactions) or manually. Over time, it gives you a performance scorecard for each vendor, helping in negotiations and future sourcing decisions.

35. What is the difference between planned and unplanned delivery costs?

• Planned delivery costs: Agreed upfront with vendor (e.g., freight, handling) and included in the PO. These are distributed to material costs at goods receipt.
• Unplanned delivery costs: Not in the PO but appear on the vendor invoice (e.g., sudden fuel surcharge). These are posted during invoice verification and usually hit a separate G/L account.

36. How do you handle stock transport orders in SAP MM?

A stock transport order (STO) is used to move goods between plants or storage locations within the same company. Here is what the process in SAP MM looks like

• Create STO (like a PO but for internal transfer).
• Perform goods issue at the supplying plant.
• Perform goods receipt at the receiving plant.

If it’s inter-company, an invoice is generated. STOs are useful for central warehouses supplying regional plants.

37. What are some common errors you’ve faced in SAP MM, and how did you resolve them?

• Price mismatch during invoice verification: This usually happened when the PO price didn’t align with the vendor invoice. I resolved it either by correcting the PO or requesting a credit memo.
• Stock inconsistencies: I used reports like MB5K and MB5B to reconcile differences between material stock and GL balances.
• Release strategy not triggering: In such cases, I checked the classification data, release codes, and authorization setup to fix the issue.
• Goods receipt blocked due to batch or serial number errors: This was solved by correcting master data or reprocessing the IDocs.

These issues are quite routine in MM, but knowing the right reports, master data checks, and configuration points helps resolve them quickly.

38. Explain how pricing procedures are configured in SAP MM.

Pricing procedures in MM determine how conditions like base price, discounts, surcharges, freight, and taxes are calculated in POs.

Here are the steps to configure:

• Define condition types (PB00 for price, FRA1 for freight, etc.).
• Group them into a pricing procedure with calculation rules.
• Assign the procedure to a vendor schema group and purchasing organization.

This ensures consistency in price determination across vendors and POs.

39. What is LSMW, and how is it used in SAP MM?

LSMW (Legacy System Migration Workbench) is a tool that is used in SAP MM for data migration. It is most commonly used to upload master data like materials, vendors or even POs. This is how it works:

• Mapping fields between legacy data and SAP.
• Converting the data into SAP format.
• Uploading via batch input, IDocs, or direct input.

For example, during go-live, you could upload thousands of vendor records using LSMW instead of manual entry.

40. How does SAP MM handle service entry sheets?

Goods and services in SAP MM need to be tracked separately due to the fact that they are inherently different. This is why service entry sheets are used. These are the steps involved.

• PO is created with service details.
• Once the service is performed, the user creates a service entry sheet (ML81N).
• The sheet goes through approval and is then accepted.
• After acceptance, invoice verification can happen.

This is how SAP ensures control of intangible deliveries such as maintenance or consulting.