Understanding Alternate Sourcing and Pegging

Alternate sourcing and pegging are closely related and enable CSRs to expand the tools they can use to meet customers demands and provide superior customer service. Alternate sourcing and pegging rely on security to control how the CSR can use the features.

See .Understanding Alternate Sources of Supply

See Understanding Feature Function Security

See PeopleSoft Supply Chain Management Common Information: Understanding Pegging.

Alternate Sources of Supply

You can choose alternate sources of supply for the order line or schedule if you select the advance sourcing option (advanced or manual) at the Order Management Business Unit. On the Alternate Source of Supply page during order entry, you can change the ship from business unit or look at alternate sources and enter different quantities for each of the sources. Inventory on-hand availability sources as well as sourcing options from new requisitions, new purchases orders, and new interunit MSRs are defined in the Alternate Sources arbitration plan and rules and retrieved by the sourcing engine. Additionally, existing supply sources (existing requisitions, purchase orders, interunit transfers, and production orders) are retrieved by the sourcing engine. These existing sources of supply do not require you to set up alternate sources of supply arbitration plans and rules. However, you must have the authority defined for your user ID setup in Inventory pegging security.

The CSR enters the quantity they want from each supply source. If the CSR chooses existing incoming supply to source the order line or schedule, the supply is soft pegged to the sales order at save time of the order. If the CSR chooses to source the order line or schedule from a new requisition, purchase order, or interunit transfer, the supply document is created and hard pegged to the order schedule when the order is saved and additional information may be required from the CSR. For new requisitions, the requisition will be pegged to the sales order when the PO_REQLOAD (Purchasing Requisition Loader) process creates the requisition.

The existing incoming supply sources are filtered through the new Inventory pegging security definition for the user ID of the current user and appear after the alternate sourcing arbitration plan/rules sourcing options in the grid. Once a supply source option is selected, the source type and disposition are stored on the line or schedule. Sourcing is done at the order line level if only one schedule exists; otherwise, it is performed at the schedule level. For each source that is selected for the order line, a new order schedule is created. If sourcing is being done on an order schedule and multiple sources are selected, the original schedule is updated and additional schedules are created.

If the CSR wants to change the supply source, the system verifies that the change is allowed. For example, the PO may already be dispatched. If the change is allowed and the supply is hard-pegged to the order schedule, Order Management will automatically update the supply document with cancellations or quantity changes. If the change to the supply document is not allowed or the supply is soft-pegged to the order, the change is still allowed on the order schedule, but only a notification is sent to the supply document owner.

The full range of Alternate sources of supply functionality can be done online. In batch, alternate sourcing is performed only for distribution network and Inventory Business Unit on hand quantity sources. The additional source options for new purchase orders, new production orders, requisitions, and interunit MSRs are not available with batch processing. If the Order Management availability option is set to Automatic (advanced sourcing), the order completion process must be performed before the advanced sourcing lookup.

Pegging

Through alternate sourcing, the CSR can choose to select on-hand available quantity from inventory business units outside the standard distribution network. Selecting quantity on-hand and direct-shipping from the warehouse is equivalent to assigning the Inventory Business Unit as the ship-from business unit on the order schedule. The item ships from that warehouse directly to the customer. Alternatively, the CSR can peg or tag lines during sales order entry to existing incoming supply or new supply to ensure that items are reserved to the order as soon as they become available in the warehouse.

The CSR can peg to:

  • Existing interunit transfers

  • Existing production orders

  • Existing purchase orders

  • Existing requisitions

  • Inventory Business Unit, direct receipt (new interunit transfer)

  • Distribution network, direct receipt (new interunit transfer)

  • New production order

  • New purchase order

  • New requisition

In addition, from the alternate sources of supply page, the CSR can choose supply sources of:

  • Distribution network

  • Inventory Business Unit

Note:

These quantity-on-hand supply sources are not pegged when the disposition of the items is direct ship-to the customer. The ship-from business unit on the order schedule is changed to the source Inventory Business Unit selected and the demand for these sources is reserved based on the inventory business unit definition for the item. If the disposition of the supply is direct receipt, a new interunit transfer MSR is created when the order is saved.

After the CSR selects the type of supply, he determines whether it should be a direct ship (ships directly to the customer) or direct receipt (ships to the warehouse and then to the customer). There can be multiple sourcing options displayed and selected. Each selected supply source will be broken into separate schedules once the options are accepted by the CSR.

Note:

The disposition of the items (direct ship or direct receipt) cannot be changed for existing supply.

There are two types of pegs:

  • A soft peg links an outgoing order to the quantity included in an incoming supply. For example, a sales order for 10 units is soft pegged to an incoming purchase order with 2,000 units. When a soft peg is changed or canceled, the peg is changed but the incoming supply (in this case the purchase order) is not changed. A notification is sent to the buyer informing them that a change in the demand pegged to the PO has taken place. Soft pegs are useful when items are in short supply and you want to peg higher priority customer orders to specific supply.

  • A hard peg is created when a sales order (demand) creates a purchase order, requisition, or interunit transfer (supply) to fulfill it. Hard pegs are only created from the sales order when adding a Direct Ship or Direct Receipt. All other orders would be considered soft pegs and will result in notifications only upon changes. When a hard peg is changed or canceled, not only is the peg changed, but also the incoming supply is changed. For example, a sales order for 10 units is hard pegged to an incoming purchase order with 10 units. If the sales order is changed to four units, then the purchase order is changed to 4 units. Hard pegs are useful for make-to-order items or special products.

Here are examples of hard pegs:

  • A new Direct Ship purchase order (formerly a drop ship purchase order)

  • A new Direct Receipt purchase order or a Direct Receipt interunit transfer that is created from a sales order

  • A new Direct Ship requisition (formerly a drop ship requisition)

  • A new Direct Receipt requisition that is created from a sales order

  • A new Direct Ship production order that is created from a sales order when the Inventory business unit is same as the Manufacturing business unit.

Note:

All other orders would be considered soft pegs.

The CSR can make changes to the pegs from the sales order alternate sources of supply page by changing the quantity requested or selecting new sources of supply. However, if the changes are not possible from the sales order, the CSR can use the Pegging Workbench to make additional changes. The CSR could also perform the pegging from the workbench instead of from the Alternate Sources of Supply page.

Note:

Creating the pegs from the pegging workbench will only create soft pegs.

Pegging can occur as long as the sales order demand is not past the Unfulfilled state in PeopleSoft Inventory. However, the CSR cannot peg product kits, configured kits, ATP or VMI items. If the demand is already soft-reserved, it cannot be pegged. Choosing to peg an existing schedule that is already soft-reserved will cancel the reserved demand and create new pegged demand for the schedule. A peg cannot be modified from the sales order if more than one unfulfilled demand line exists for the schedule (a backorder has been created). You must use the pegging workbench (a link is provided from the sales order alternate sources page) to modify the pegs.

To peg to existing supply documents, the CSR must have the appropriate security defined. The Inventory pegging user security has to be set up enabling the user ID to peg supply documents to sales order demand.

You can set up notifications to notify the CSR if changes are made to any documents that are pegged. Similarly, notifications can be sent to the supply owner if changes are made to the sale order. The system has preestablished notifications set up using the Message Dashboard. You can use the existing notifications or add notifications.

If an order goes on hold when pegging to a PO, then the Pass to Purchasing flags will determine whether the PO is created or whether a requisition is created. The PO is created if the Pass to Purchasing flag for the hold is set to Yes. If the Pass to Purchasing flag is set to No, a requisition will be created using requisition loader. When the order hold is removed, the requisition loader should be run which will create a requisition and peg the order to it. When the requisition becomes a PO, the order will be then pegged to the PO.