What Is Pegging?
Also known as: MRP pegging, full pegging, single-level pegging, where used demand, requirements tracing
Definition
Pegging links each supply order in MRP to the demand that created it, such as a sales order, forecast or parent job. It lets planners trace a component shortage up to the affected customer order and understand why an order exists.
Pegging Explained
MRP nets demand and supply by item and date, so by default it does not remember which parent caused which requirement. Pegging adds that memory. Single-level pegging records the immediate parent demand for a requirement. Full pegging follows the chain up through every level to the top-level independent demand, such as a customer order.
Pegging has two main uses. Upward, it answers who needs this: if a purchased part is late, pegging shows which jobs and which customer orders are at risk. Downward, it answers why does this order exist: the planner can see that a planned purchase exists because of a specific build or forecast and decide whether to keep it.
Support varies. Infor LN has project and order pegging that ties supply to specific demand, which matters in engineer-to-order work. SyteLine provides order and job tracking views of supply and demand for items. NetSuite and SAP provide where-used and pegging views through supply and demand and requirement reports. Where a system lacks full pegging, planners reconstruct it by hand, which is slow.
Pegging is distinct from allocation. Allocation actually reserves stock to an order. Pegging is an analytic link that may or may not reserve inventory, depending on the system and the planning mode.
Why It Matters
- It turns a shortage alert into a customer impact statement, which is what sales and management actually want to hear.
- It lets planners cancel or shrink orders confidently when the original demand disappears.
- Order-specific pegging is essential for project and engineer-to-order manufacturing with job costing.
- It is the data an AI assistant needs to answer which customers are affected by this late part.
In Practice
Example: a bearing is two weeks late. Full pegging shows that it feeds three gearbox jobs, which in turn peg to sales orders for two customers, one due Friday. The planner expedites for the Friday order and re-promises the other. Without pegging, this takes a manual walk through where-used and open orders.
Frequently Asked Questions
What is the difference between full pegging and single-level pegging?
Single-level pegging links a requirement to its immediate parent. Full pegging follows the chain to the original top-level demand, such as a customer order.
Is pegging the same as allocation?
No. Allocation reserves stock to an order. Pegging is a traceability link between supply and demand and does not necessarily hold inventory.
Why is pegging hard in a nettable, multi-level plan?
Because supply is pooled across demands, one order can serve several parents. Systems store explicit links or approximate with rules such as earliest-demand-first.
Related Terms
MRP (Material Requirements Planning)
MRP (Material Requirements Planning) is the ERP calculation that explodes demand through bills of materials, nets it against on-hand and on-order inventory, and offsets by lead time to produce timed purchase and work order suggestions.
BOM (Bill of Materials)
A BOM (bill of materials) is the structured, hierarchical list of components, sub-assemblies, and quantities required to produce one unit of a parent item, and it is the primary input MRP explodes to calculate material requirements.
Project Pegging
Project pegging in Infor LN links demand, supply, inventory and cost to a specific project, element or activity. Pegged material is reserved for that project only and its costs flow to the project budget, which is how contract-driven manufacturers segregate program inventory.
Planned Order
A planned order is a system-generated supply proposal that MRP creates to cover a net requirement. It has a quantity and dates but is not yet a committed job, production order or purchase order, and MRP can delete or reschedule it on every run.
Go Deeper
SyteLine MRP Health Check
Diagnose why your SyteLine MRP output is noisy or ignored, scoring data accuracy, parameters, and planner behavior across ten dimensions.
Infor LN MRP Planning Configuration Guide
Configure MRP planning in Infor LN with planning parameters, order policies, safety stock rules, and demand pegging for optimal material requirements.
SyteLine MRP Parameters Tuning Guide
Optimize SyteLine MRP parameters including order policies, lot sizing, safety stock, and lead times for accurate material requirements planning results.
Working with Pegging in a live environment? Our engineers do this every day - and our AI agents automate most of it.