Project Pegging

A production order can be used to meet multiple demands from multiple projects and hence requires pegging distribution at the order level and at order line levels (such as estimated materials, production planning). This process is called (cost) pegging and the attributes are called pegs. If an item is project pegged, you can track the costs at the project, activity, and element level through the complete product life-cycle.

To perform proper (cost) allocation, tracking and tracing, inventory registration, and supply, pegging information must be added to items, inventory, and transactions throughout the entire goods flow, from ordering/receiving to issue/consumption. Because item lines can be split into multiple cost pegs, a peg distribution level is required below the item line. The main purpose of these cost pegs is cost distribution and not the physical movement of items.

  • Planning groups

    Commingling and cost transfer rules are defined at the planning group level to control supply planning of project pegged items within one or several planning groups. When excess inventory occurs in a project, the inventory can be consumed by other projects when not limited by commingling rules defined for the planning group or project with the excess.

    A cost transfer is a project cost account change and not a physical transfer of items. Cost transfer rules determine under which conditions excess inventory on projects is made available for transfer to other projects, excess inventory from other projects can be received, or inventory from other projects can be received.

    Project requirements for project pegged items can be commingled across project planning groups or can be restricted to a single planning group. You can also exclude project cost accounts from commingling.

  • Borrow/loan and payback

    To satisfy urgent material requests, parts can be moved between projects as long as the borrowing project pays back and absorbs any additional costs that occur.

    Although inventory physically moves between projects, there is no cost impact. The borrowing project manages the replenishment of the part, after which the part and its costs are paid back to the lending project. Any additional charges are absorbed by the borrowing project. If the part cannot be paid back before the next billing cycle, an outstanding borrow/loan is converted into a permanent transfer by using the aging process.

  • Cost peg transfers

    Cost peg transfer functionality enables the transfer of costs between two different pegs (pegged to unpegged and vice versa). The cost peg transfers do not physically move the inventory, but only transfer the costs of the inventory. Cost peg transfers are performed within the same warehouse. You cannot transfer the goods across warehouses.