Allocation and hard pegging in Warehouse Management

The primary purpose of the allocation and hard pegging functionality is to link supply orders to demand orders, or to allocate inventory to a specific demand order. A supply order, for example, a production order, contains a quantity of a particular item needed to fulfill a demand. A demand order is a sales order or sales schedule fulfilling the demand of a customer.

LN uses specifications to:

  • Hard peg, in other words, to link, a supply order to a demand order
  • Allocate inventory to a demand order

When a demand order is created, LN:

  • Links a specification to the demand order.
  • Allocates inventory to the demand order.
  • Updates the quantity of the Inventory Allocated field of the Inventory by Specification (whwmd2519m000) session with the quantity of the demand order, even if insufficient inventory is available to fulfil the demand order.

If insufficient inventory is available to fulfil a demand order, you can create supply orders or allocate inventory using allocation buffers. For more information, refer to:

You can also allocate inventory to demand orders without specifications. Allocating inventory without specifications is available without the allocations and hard pegging functionality. For information on allocating inventory to orders without specifications, see Inventory commitment.

Demand orders obtain no specifications if the applicable terms and conditions do not provide for the use of allocation and hard pegging or if the allocation and hard pegging functionality is not used. For information about the setup of allocations, hard pegs, and specifications, see Setting up demand pegging.

To hard peg supply orders

Supply orders are generated or manually created if insufficient allocated or unallocated inventory is present to fulfil the demand order. If a supply order is generated for the demand order, a specification is also generated for the supply order. This specification has the same characteristics as the specification of the demand order. For more information, refer to Demand pegged supply orders.

When outbound order lines, outbound advice lines, shipment lines, and so on, are created for the demand order during warehouse processing, specifications are generated for these lines. These specifications obtain the specification characteristics of the demand order.

Likewise, the specification characteristics of the supply order are passed on to the specifications generated for the inbound order lines, receipt lines, inspection lines, or handling units.

Parameter settings determine whether items received by supply orders become identifiable in inventory through handling units generated for the receipts line of the supply order when the receipt is confirmed. These handling units obtain specifications with characteristics identical to those of the supply order. For more information, refer to Inventory allocation levels.

When outbound advice is generated for the demand order, LN issues inventory whose specification characteristics match those of the outbound order lines of the demand order. Parameter settings determine whether specific handling units or anonymous allocated inventory is issued. For more information, refer to Inventory allocation levels.

Allocation buffers

You can use allocation buffers to allocate free, (unallocated) inventory if insufficient inventory is present. The inventory included in an allocation buffer is linked to a specification. As a result, the buffered inventory is available for demand orders with matching specification criteria.

For more information, refer to Allocation buffers.

Note

Unlike supply orders, for the allocated inventory included in an allocation buffer, no handling units are generated if the inventory allocation level is physical item. For more information, refer to Inventory allocation levels.

Changing allocations

Changing an inventory allocation is required, for example, if the order for which the inventory is allocated is cancelled. To change an allocation, you must use an allocation change order.

Determining available unallocated inventory

The unallocated available inventory is calculated in LN. For more information, refer to To calculate available unallocated inventory

Inventory allocation levels

Inventory allocation levels determine whether allocated-to inventory is identifiable and traceable in the warehouse by means of handling units or merely registered as allocated-to inventory.

For more information, refer to Inventory allocation levels.

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