Pegging

General information about pegging

Effective production planning of the entire supply chain is only possible if there is continuous clarity of the relationships in the chain, which in turn leads to production and delivery of products.

In other words, this means that at every point in the supply chain (sales, production on all levels, purchasing) the pegged requirements have to be known for each receipt or, in reverse logic, the covering receipt (if existing) has to be known for each requirement.

This is necessary for the following functionalities:

• Establishing transparency and identifying exceptions in the supply chain
• For multi-level planning , to coordinate the elements of the supply chain
• Determination of material availability in multi-level manufacturing scenarios, e.g. in mechanical engineering

It is particularly difficult to link the requirements and covering receipts in a make-to-stock (MTS) scenario using pegging, since

• there are no fixed links between the levels of the supply chain (product levels) and these have to be generated according to a defined logic.
• the lot sizes can be different at different product levels and partial quantity assignments can occur.

Pegging Logics

There are two basic pegging logics: ATP (available to promise) or FIFO (first-in first-out)

Additional Rules

Additional filters and prioritisation rules can be added to these basic logics. An example of this is the horizon within which receipts and requirements can be assigned to each other:

A great advantage of pegging

A great advantage of pegging is that even in make-to-stock scenario, you know exactly which receipt meets which requirement. For example, a planned order or a production order can cover a sales order. If the required components are made available late, you can quickly see which receipts have to be postponed and which customers have to be notified.

No differentiation of requirement/receipt per level → only consideration of receipts (here orders) per level.

For the first primary order of 40 bicycles, both the first tyre order (40 pcs.) and the second tyre order (60 pcs.) are needed in case of total quantity pegging in the picture above, whereas only the first tyre order (40 pcs.) is assigned in case of partial quantity pegging in the picture below.

Multilevel pegging upwards

Multilevel pegging downwards

Order network

Here, in the "Order network upwards", " Orders on bottleneck" and "Order network down" views, it is made clear that in PPC for a selected order in production (marked order on bottleneck in the view in the middle) both the structure upwards (in this case it covers several independent requirements) and the structure downwards (component overview) are shown at the top of the screenshot and at the bottom of the screenshot respectively.

This separate display of the pegging paths/directions of an assembly order contributes greatly to clarity .

Order list and pegging network

The screenshot below shows a combination of different views in the production planning cockpit "PPC": On the left, one order (either planned or a production order) is displayed per line, and on the right, the pegging structure for that order is displayed.