Demand pegging example

Item S

The subcontractor starts by creating a subcontracting sales order for item S for which inventory must be allocated. For the sales order, a production order is planned in Enterprise Planning and created in Job Shop Control. The sales order has a specification that is propagated to the production order.

Items H, C1, C2, and C3 are in the bill of material for item S. The Inherit Demand Peg field in the Bill of Material (tibom1110m000) session determines if and how the specification is further propagated from the production order to the production order estimated material lines.

The manufacturer is identified as sold-to business partner MFG1 in the subcontractor’s system.

Item H

Item H is a subassembly item of the manufacturer and therefore delivered by the manufacturer.

The Inherit Demand Peg field in the Bill of Material (tibom1110m000) session is set to Obsolete. This means that for item H , LN checks the terms and conditions agreement to determine which specification attributes must be propagated.

Item H is planned by the manufacturer on an order basis. To uniquely identify H, the subcontractor receives the reference ”SFC0001/20” from the manufacturer. For item S, this reference is stored in the Reference field on the sales order.

The specification on the purchase order also contains the reference “SFC0001/20” for item H.

Components C1 and C2

Items C1 and C2 are components that are planned and delivered by the manufacturer.

The Inherit Demand Peg field in the Bill of Material (tibom1110m000) session is set to Obsolete for items C1 and C2. This means that LN checks the terms and conditions agreement to determine which specification attributes must be propagated to the estimated material lines for the items.

C1 and C2 are supplied by the manufacturer on a bulk basis. The purchase orders for C1 and C2 have a specification that contains the business partner MFG1. C1 and C2 are allocated to this manufacturer.

Component C3

Item C3 is a component that is planned by the subcontractor.

The Inherit Demand Peg field in the Bill of Material (tibom1110m000) session is set to Yes for item C3. This means that the specification from the production order is propagated one-to-one to the estimated material line for C3.

In an order planning run in Enterprise Planning, a purchase order is created by the subcontractor. The specification is propagated from the sales order to the purchase order.

Demand pegging data

H, C1, C2, and C3 must be issued to the production order PRD001. This is only possible if the specifications on the estimated material lines equal the specifications in inventory. In other words, the specifications on the supply side must equal the specifications on the demand side.

The following tables display the specification data for the production order, sales order, and purchase orders. The warehouse orders and planning orders are not mentioned, but the specifications on the warehouse orders are derived from the originating orders.

Sales and Procurement
Item	S	H	C1	C2	C3
Demand Pegging Type	Customer Reference Based	Customer Reference Based	Business Partner Based	Business Partner Based	Not Applicable
Order Type	Sales order	Purchase order	Purchase order	Purchase order	Purchase order
Order Number	SLS001	PUR001	PUR001	PUR002	PUR003
Specification
Allocated to Business Partner	MFG1	MFG1	MFG1	MFG1	MFG1
Allocated to Reference	SFC0001/20	SFC0001/20	Not Applicable	Not Applicable	SFC0001/20

Job Shop
Item	S	H	C1	C2	C3
Demand Pegging Type	Not Applicable	Customer Reference Based	Business Partner Based	Business Partner Based	Not Applicable
Demand Peg Propagation	Not Applicable	Read terms and conditions	Read terms and conditions	Read terms and conditions	Propagate
Order Type	Production order	Production order material	Production order material	Production order material	Production order material
Order Number	PRD001	PRD001/10	PRD001/20	PRD001/30	PRD001/40
Specification
Allocated to Business Partner	MFG1	MFG1	MFG1	MFG1	MFG1
Allocated to Reference	SFC0001/20	SFC0001/20	Not Applicable	Not Applicable	SFC0001/20