Project Pegging

In project manufacturing environments, to facilitate cost accountability for finished goods within projects, you can implement project pegging and indicate that items are project pegged. If a project-pegged item is specified on a demand order, pegging information is used to allocate, track, trace, register, and supply inventory.

Throughout the entire flow of goods, pegging information is added to items, inventory, and transactions when goods are ordered, received, issued, and consumed. Consequently, you can track the costs at the project, activity, and element level.

Peg distribution information is available for purchase, warehouse and job shop orders to track for which project cost account the goods are ordered. The peg distribution lines include the item, required quantity, unit, configuration, and the project cost account (peg) elements. In addition, the distribution lines contain information on the top demand order, such as customer, contract, prime contractor, and top demand order date. The main purpose of distribution lines is cost distribution and not the physical movement of items.

In case of exceptional situations, such as partial receipts, over issues, rejections, and returns, the quantities are allocated according to the fair, equitable and unbiased accounting principle in which the demand need date is the main driver. Multilevel order pegging inquiries are available to manage dependencies in the supply chain, and requirements of multiple projects can be commingled in one purchase order to leverage volume discounts.

Actual costing and earned value can be reported any time against the project.

  • 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 transfer rules

    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.