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Author's profile photo Veera Nagendra Reddy

Pipeline procurement process

Pipeline procurement 

It is the process where, material will be flowing from the vendor premises to plant premises, and pipeline material is not stored in any storage location or plant as it consumed directly as when required, because it flows directly into the production process from pipeline or via cable and coming to payment its similar to consignment.

examples of pipeline materials are electricity, oil, Gas and water.


Creation of purchase requisition and purchase order is not required because material from the pipeline is always available; i.e. it can be withdrawn from the pipeline at any time and in any quantity.

Purchase info record with Info Category Pipeline is mandatory for Pipeline material and while creating material master we need to select the material type as Pipeline material.

let’s see the process flow for more understanding.

Before creation of material master, go to (t.code OMS2) and select material type PIPE and click detail button here pipeline mandatory checkbox is ticked by default and if you see that storage view is not selected.

click on quantity / value updating, here qty/value update tick mark is not required.

  1. Create material master for pipeline material say for Gas with material type PIPE (t.code MM01)

Material 81 created

2. Create purchase info record with Info Category Pipeline (t.code ME11)

If plant is having more than one purchase organization then create info record with that plant standard purchase organization only and standard purchase organization info record price only will pic to automatic settlement document.

In info record price and tax code is mandatory or else we can receive an error in MRKO posting

 Purchasing info record created

3. Post goods issue with (t.code MIGO)

You can enter a pipeline withdrawal for an cost center (with movement type 201 P) or for order (with movement type 261 P).

In the below screen it is issuing to cost center and special stock type is P

Material document 4900000662 posted

You can see the accounting entries of pipeline consumption

A/c Payable for Pipeline : CR –

Consumption A/C: DR +

Note: Maintain condition record with (t.code MRM1) to send pipeline settlement document to vendor or else document number will not create during pipeline settlement.

Give the output type as KONS and select key combination

After giving the vendor number click on communication and enter required details and save it.

4. Now create automatic settlement document with (t.code MRKO)

In this transaction select pipeline option and give the selection criteria and click on execute.

You can see the below screenshot where document number generated.

See the accounting entries for pipeline settlement

Vendor A/C : CR –

A/c Payable For Pipeline : DR +

Printing/transmitting the settlement document to vendor with output type KONS  for  the invoice created in MRKO (t.code MR91)

Select the line item and click on process button


From the above steps, we can understand how the material flows directly into the production process through pipeline or cable and how the material consumed even there is no stock maintenance in storage location and how the pipeline liabilities are settled by using MRKO transaction.

Hope this blog-post will be helpful and will provide sufficient information to the readers.

Please like, share and comment, for any queries please add a comment through “Add Comment” button at bottom of this blog post or you can also Ask a Question by using the following link.



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      Author's profile photo Bhumika dodia
      Bhumika dodia

      Nice explanation!!

      Author's profile photo Veera Nagendra Reddy
      Veera Nagendra Reddy
      Blog Post Author

      "Thanks, Bhumika!"

      Author's profile photo Tom Critchley
      Tom Critchley

      Hi, All.


      We want to limit the users that can create/amend the PIR's specifically for PIpeline and Consignment types only.  Has anyone been able to do this or advise on how to achieve this.

      Author's profile photo Vamsi Kumar Reddy
      Vamsi Kumar Reddy

      Nice Explanation