Demand pegging overview

Demand pegging is used to designate a quantity of supply to a specific demand.

With demand pegging, you can do the following:

Promise a customer a particular quantity of an item. The allocated inventory cannot be shipped to other customers and serves as a reservation.
Link an identifiable quantity of an item to a particular demand. In this way, this quantity cannot be interchanged with another quantity of the same item. For example, you use this to keep components and subassemblies together.

To do this, LN links supply orders or inventory to demand orders using specifications.

If supply is pegged to a specific demand, numerous processes are involved, such as:

Order planning
Issue and receive materials
Outbound and ship goods

Using demand pegging

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 Allocated field in the Inventory by Specification (whwmd2519m000) session with the quantity of the demand order, even if insufficient inventory is available to fulfill the demand order.

Note:

If the demand order is created manually or from independent demand, specifications are created based on the demand pegging data for the item or the linked terms and conditions agreement.
If the demand order is created from dependent demand, the demand order can receive a specification only from the origin that created the order. To see how a specification is transferred between business objects, refer to Demand pegging example.
To use demand pegging, you must set up the master data. For more information, refer to Setting up demand pegging.

Handling insufficient inventory

If insufficient inventory is available to fulfil a demand order, you can create supply orders or allocate inventory.

If insufficient allocated or unallocated inventory is present to fulfil the demand order, supply orders are generated or manually created. 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.

If insufficient allocated but sufficient unallocated inventory is present, inventory is allocated using allocation buffers. The inventory included in an allocation buffer is linked to a specification. Therefore, the buffered inventory is available for demand orders with matching specification criteria. For more information, refer to Allocation buffers.

Note:

You can also allocate inventory to demand orders without specifications. Allocating inventory without specifications is available if the allocations and hard pegging functionality is not implemented. See Inventory commitment.
If insufficient inventory with a particular specification is available in the warehouse, you can create outbound advice for unallocated inventory or inventory from a different specification to make up for the missing quantity. Whether this is allowed is determined by the Advise Unallocated Inventory and Demand Peg of Outbound Line is Binding check boxes in the Warehousing Settings by Site (whwmd2101m000) session. See Allocated or unallocated inventory in the outbound process.

Inventory allocation levels

Inventory allocation levels determine whether allocated-to inventory is identifiable and traceable in the warehouse through handling units or merely registered as allocated-to inventory. You can define allocation levels for warehouse - item combinations in the Item Data by Warehouse (whwmd2510m000) session and the Item - Warehousing (whwmd4600m000) session.

For more information, refer to Inventory allocation levels.

Changing inventory allocations

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

Allocation change orders are generated based on a number group and series defined in the Inventory Handling Parameters (whinh0100m000) session. You can view and maintain allocation change orders in the Allocation Change Orders (whinh1120m000) and Allocation Change Order Lines (whinh1130m000) sessions.