SAP MM Mock Interview 1 by Ganesh Padala | Basics of SAP | Reference Purchase Organization | Free

Summary

The video explains key concepts of SAP MM, focusing on Reference Purchasing Organization, master data, and procurement processes. It highlights how Reference Purchasing Organization streamlines contracts for decentralized plants, ensuring cost efficiency and time savings. The video also covers essential master data types, including material master, vendor master, purchase info record, source list, and service master, explaining their roles in pricing, vendor management, and stock control. Additionally, it details material master views—basic, purchasing, sales, and accounting—emphasizing their importance in integrating procurement, sales, and financial processes. The discussion provides practical examples to clarify complex concepts, offering a comprehensive understanding of SAP MM functionality.

Takeaways

• 😀 Reference Purchasing Organization (RPO) is used in decentralized purchasing systems to create a single contract for multiple plants, improving efficiency and pricing.
• 😀 Decentralized purchasing means each plant has its own purchasing organization and handles procurement independently.
• 😀 Bulk ordering through RPO can lead to better pricing compared to individual plant orders.
• 😀 Material Master is a core SAP MM master data that contains multiple views: Basic, Purchasing, Sales, and Accounting.
• 😀 Basic view in Material Master includes material description, base unit of measure, and material group.
• 😀 Purchasing view in Material Master includes purchasing group, order-related keys, and automatic PO settings.
• 😀 Purchase Info Record stores pricing and conditions for a specific material-vendor combination, and the PO fetches price from here.
• 😀 Source List specifies preferred vendors for a material and can block or fix vendors for a specific time period.
• 😀 Service Master is optional and used for procuring services such as painting, security, housekeeping, or freight; services can also be created with short text.
• 😀 Vendor Master stores information about suppliers and is crucial for procurement processes in SAP MM.
• 😀 In accounting view of Material Master, standard or moving average prices are maintained, and valuation class links MM with FI.
• 😀 SAP MM is a vast module; mastering core master data and procurement concepts is essential for understanding advanced topics.

Q & A

What is a reference purchasing organization in SAP MM?

A reference purchasing organization is used in a decentralized purchasing system where multiple plants have their own purchasing organizations. It allows the creation of a single contract for all plants when they purchase the same material from a single vendor, ensuring consolidated pricing and reducing time-consuming separate contracts.

Why would a company use a reference purchasing organization?

A company uses it to streamline procurement processes when multiple plants order the same material from a single vendor. This ensures better pricing due to higher quantity orders and reduces the administrative effort of managing multiple contracts.

What is a purchase info record (PIR) and its purpose?

A purchase info record stores data about a material and a vendor, including pricing, planned quantity, and purchasing organization. It is used to determine the price in a purchase order automatically.

From where does SAP MM fetch the price when creating a purchase order?

The system fetches the price from the purchase info record. If no info record exists for the material-vendor combination, the system will ask the user to manually provide the price.

What is the source list used for in SAP MM?

The source list is used to maintain preferred or fixed vendors for a material. It can block vendors temporarily and ensures procurement is sourced from approved suppliers during a specific period.

What is the service master and when is it used?

The service master is used for service procurement, such as painting, maintenance, security, or vehicle rental. It is optional, and services can alternatively be described with short text, unlike materials which require a unique material number.

What are the key types of master data in SAP MM?

Key master data includes Material Master, Vendor Master, Purchase Info Record, Source List, and Service Master. These records support procurement, pricing, and stock management.

Why is a material master mandatory but a service master optional?

A material master is mandatory because materials are tracked in inventory and require unique identification for stock management and procurement. Services are consumed differently and do not require stock tracking, so the service master is optional.

What information is maintained in the accounting view of the material master?

The accounting view includes standard price or moving average price of the material, valuation class, and integration details with financial accounting (FI). It plays a crucial role in financial transactions.

What advantages does centralized procurement through a reference purchasing organization provide?

Centralized procurement through a reference purchasing organization provides advantages such as reduced administrative effort, consistent pricing across plants, bulk order discounts, and streamlined vendor management.

Can a company have both decentralized and centralized purchasing at the same time?

Yes, a company can maintain a decentralized system for individual plant needs while using a reference purchasing organization for centralized contracts on certain materials, combining the benefits of both approaches.

What is the importance of master data like material master and vendor master in SAP MM?

Master data ensures accurate procurement and inventory management. Material master provides information for stock, pricing, and financial accounting, while vendor master contains supplier details critical for procurement and payments.