Discovering SAP’s Grouping, Pegging, and Distribution(GPD) – Pegging

[Varsha2]

Welcome to the second blog of the series on understanding GPD - Pegging!!

Pegging component of the GPD function allows a connection / association between a demand object (reservations, planned, independent requirements) and a supply object (productions orders, purchase orders) in SAP. This relationship is needed to appropriately distribute the costs further.

Pegging can be performed in two different ways:

1. MRP Logic – considers current requirement planning situation, historical assignments are ignored.


2. Fixing Rule – here the attempt to copy as many assignments as possible from the pegged requirements is made. It also covers assigning the exception rules which is ID 3 below of the pre-requisite section.

Pre-requisite:

1. Material demands are grouped into one Group WBS or multiple Group WBS.


2. In customising, assign a Distribution profile to Group WBS.


3. In customising / PEG04 Exception rules are assigned (Scrap, Surplus, Stock Differences) at Plant or Group WBS level.


4. In customising Movement types for Pegging are maintained.

Customising: Logistics → Project System → Costs → Automatic and Periodic Allocations → Pegging.

Benefits:

1. Helps business to keep track of the demand.


2. Clear visibility in the supply chain for better planning, forecasting, and scheduling.


3. Can be very useful in cases of supply disruption.


4. Pegged requirements may be utilised to forecast future demands.

Limitations:

These functions are not supported-

1. Cross-company or cross-plant processes.


2. Grouped materials will be pegged without taking into consideration serial number.


3. Manufacturer part numbers.


4. Majority of the gaps needs to be further enhanced.

Summary:

Pegging establishes a relationship between a material and the requirement. This relationship then forms the basis for further cost distribution. Considering the limitations of GPD - Pegging mainly, Project Manufacturing Management and Optimisation (PMMO) in S/4 HANA is far more improved solution with improved changes to pegging data structures for better performance, Peg up and down report, error logging etc.

References:

Grouping, Pegging, Distribution - SAP Documentation

Pegging - SAP Documentation

Thank you for taking the time to read this article.

In the next blog of this series, we will see the Distribution approach - Distribution.

See you there!