Demand Pegging

Demand pegging establishes a parent-child relationship from the demand source down to the supply receipt. Unlike supply pegging, which traces upward, demand pegging answers the question: "Which customer orders are consuming this specific purchase order or production batch?" This directional link is essential for impact analysis when a supply receipt is delayed or scrapped, allowing planners to immediately identify all affected sales orders and their promised delivery dates.

In manufacturing environments, pegging extends through the bill of materials (BOM) to create multi-level chains. A finished good sales order pegs to a production order, which in turn pegs to its component work orders, which peg to raw material purchase orders. This full pegging chain provides end-to-end visibility, enabling a planner to trace a raw material shortage all the way to the specific customer orders at risk, prioritizing expediting efforts based on revenue impact.

Pegging relationships can be soft or hard. Soft pegging is a planning-time association that can be dynamically reassigned by the planning engine as priorities shift. Hard pegging is a transactional lock that physically reserves supply for a specific demand, preventing reallocation. Hard pegs are common in make-to-order and engineer-to-order environments where customer-specific configurations or regulatory requirements demand strict lot traceability.

Demand pegging is the foundational mechanism behind allocation management. By pegging high-priority customer orders to specific supply receipts, the system prevents those receipts from being consumed by lower-priority demand during the ATP check. This ensures strategic accounts receive their committed inventory even during shortages. The pegging record acts as a reservation contract that the order promising engine must honor.

When a purchase order is delayed, the pegging data enables a shortage impact report. The system instantly identifies all downstream demands linked to that receipt and calculates the magnitude of the shortfall. This allows planners to perform what-if simulations—re-pegging available supply to the most critical orders—before executing changes. Without pegging, shortage resolution is a manual, error-prone process of searching through spreadsheets.

Demand pegging directly feeds the Available-to-Promise (ATP) and Capable-to-Promise (CTP) engines. When an order is promised, a pegging record is created linking the order line to the specific supply element that covered the commitment. This pegging data is then used for subsequent ATP netting calculations, ensuring that supply already committed to a pegged demand is not double-promised to another incoming order.

The reverse process of demand pegging, linking a specific customer order to the exact supply elements that will fulfill it. While demand pegging traces from supply to demand, supply pegging traces from demand to supply, enabling critical impact analysis.

• Identifies which orders are impacted by a delayed purchase order
• Enables order-level exception management
• Essential for communicating realistic revised delivery dates to customers

A real-time inventory and capacity check that determines the quantity and delivery date that can be committed to a customer order. ATP relies on accurate pegging data to understand which supply is already allocated to existing demand.

• Consumes the pegging relationship to calculate uncommitted supply
• Prevents double-booking of inventory across multiple orders
• Forms the foundation of the order promising engine

An extension of ATP that evaluates production capacity and material availability in addition to on-hand inventory. CTP uses pegging to understand the full bill-of-material implications of a new order.

• Pegs demand through the manufacturing bill of materials
• Evaluates whether raw materials can be procured in time
• Generates feasible delivery dates based on finite capacity scheduling

The act of creating a hard or soft link between a specific quantity of inventory and a customer order. This is the operational execution of the pegging relationship at the warehouse management system level.

• Hard reservation: Physically allocates stock, preventing any other order from consuming it
• Soft reservation: A planning-level hold that can be overridden for higher-priority demand
• Ensures pegging integrity during picking and shipping

A future point in the planning horizon within which actual customer orders fully consume the forecast. Inside the DTF, pegging is driven by real demand signals rather than statistical predictions.

• Prevents the forecast from generating duplicate supply requirements
• Ensures pegging accuracy for near-term commitments
• Typically set based on cumulative manufacturing and procurement lead times

The automated workflow for managing customer orders that cannot be fulfilled immediately. When supply becomes available, the pegging engine re-evaluates which backordered demands have the highest priority.

• Uses pegging to identify which orders are waiting on specific inbound receipts
• Automatically re-promises orders as supply arrives
• Maintains full audit trail of original and revised commitments