Supply Pegging

Unlike demand pegging, which traces from supply to demand, supply pegging works in the opposite direction. It starts with a customer order and identifies the exact supply receipts allocated to satisfy it. This creates a complete fulfillment genealogy, allowing planners to instantly see which orders are impacted when a specific purchase order is delayed or a production batch fails quality inspection.

Supply pegging relationships can be classified by their rigidity:

• Hard Pegging: A permanent, system-enforced link that prevents the supply from being reassigned to another order. Used for high-priority customers or regulated industries like aerospace and defense.
• Soft Pegging: A suggested, dynamic link that the planning system can automatically reassign during re-planning to optimize overall fulfillment. This is the default in most ERP systems.
• Manual Pegging: A planner-initiated override that locks a specific supply to a specific demand, bypassing automated allocation logic.

The primary operational value of supply pegging is exception management. When a supplier notifies you of a 3-day delay on Purchase Order #4521, the pegging data instantly reveals:

• Which customer orders are dependent on that PO
• The committed delivery dates now at risk
• Whether any of those orders are for strategic accounts This enables proactive customer communication before the promised date is missed, rather than reactive firefighting after the fact.

In manufacturing environments, supply pegging extends through multiple levels of the bill of materials (BOM). A finished good order is pegged not only to the final assembly work order but also through to:

• Sub-assembly production orders
• Component purchase orders
• Raw material receipts This multi-level visibility means a shortage of a single raw material can immediately expose all affected end-customer orders across the entire product hierarchy.

Supply pegging is tightly integrated with Available-to-Promise (ATP) logic. When an ATP check reserves inventory for a new order, the system simultaneously creates a pegging record linking that order to the specific supply source. During subsequent ATP re-calculations, the pegging data preserves the fulfillment priority: orders with hard pegs are not re-promised, while soft-pegged orders may be reallocated if a higher-priority demand enters the system.

While related, these concepts serve distinct purposes:

• Supply Pegging: A transactional, order-level link answering 'Which supply fulfills this specific order?'
• Allocation Management: A strategic, category-level reservation answering 'How much inventory is reserved for this channel or customer tier?' Pegging operates at the granularity of individual order lines and supply lots, while allocation defines the percentage or quantity of total supply available to a segment before individual orders are even placed.

The inverse process of supply pegging. Demand pegging traces a specific supply receipt—such as a purchase order or production run—forward to the customer orders that are consuming it. While supply pegging answers 'What supplies fulfill this order?', demand pegging answers 'What orders consume this supply?'. Together, they create a bi-directional traceability network essential for:

• Prioritizing shipments during a shortage
• Communicating delay impacts to specific customers
• Auditing material flow for regulatory compliance

The core calculation engine that powers Available-to-Promise logic. ATP netting subtracts gross demand requirements from scheduled receipts and on-hand inventory to compute the projected available balance. Supply pegging provides the granular linkage that makes ATP netting auditable—each netted quantity can be traced to a specific supply element. Key netting methods include:

• Backward netting: Allocating from the latest receipt first
• Forward netting: Consuming the oldest available supply
• Pegged netting: Maintaining explicit order-to-supply links throughout the calculation

The act of creating a hard link or soft link between a specific quantity of on-hand or inbound inventory and a customer order. A hard reservation physically blocks the inventory from being allocated elsewhere, while a soft reservation creates a planning preference that can be overridden. Supply pegging formalizes these reservations into a persistent data structure, enabling:

• Guaranteed availability for high-priority customers
• Audit trails for allocation decisions
• Automatic re-pegging when supply disruptions occur

A defined sequence of product replacements where an older item is discontinued and replaced by a newer version. When supply pegging encounters a supersession chain, it can automatically re-peg the demand to the replacement item's supply. This prevents broken pegging links during product transitions. Supersession types include:

• One-to-one: Single replacement product
• One-to-many: Multiple replacement options
• Bidirectional: Interchangeable products that can fulfill each other's demand

The automated workflow for managing orders that cannot be fulfilled immediately due to insufficient supply. Supply pegging is critical here because it maintains the original promise link even when fulfillment is delayed. When new supply arrives, the pegging structure enables:

• Automatic re-promising against the incoming receipt
• Priority sequencing based on original order date or customer tier
• Partial fulfillment splitting while preserving traceability of each portion

An advanced promising method that uses a constraint solver to simultaneously evaluate material, capacity, and transportation limitations. Unlike rule-based approaches, constraint-based ATP generates a globally feasible delivery date by solving all constraints concurrently. Supply pegging within this context provides the explanatory layer—showing exactly which constraint (e.g., a bottleneck work center) caused a delayed promise date and which supply elements are affected.