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What Is Pegging?

3PL Glossary > Pegging

Pegging Definition | TLDR

Pegging is a supply chain management technique used to link dependent demand and supply orders, ensuring that orders for components or materials are synchronized with the production or assembly schedule of finished products to maintain inventory balance and meet customer demand.

Pegging Meaning

Pegging in the context of business and supply chain management refers to the association or linking of specific demands or orders with their corresponding sources of supply or production. This process is vital for maintaining transparency and traceability within the supply chain, enabling businesses to understand the relationships between customer demands and the various components of their production or distribution processes. Pegging is often used in enterprise resource planning (ERP) systems to establish clear connections between sales orders, purchase orders, and the corresponding inventory or manufacturing activities.

How does pegging contribute to efficient supply chain management, and what role does it play in optimizing production schedules?

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Pegging in the context of business and supply chain management refers to the association or linking of specific demands or orders with their corresponding sources of supply or production. This process is vital for maintaining transparency and traceability within the supply chain, enabling businesses to understand the relationships between customer demands and the various components of their production or distribution processes. Pegging is often used in enterprise resource planning (ERP) systems to establish clear connections between sales orders, purchase orders, and the corresponding inventory or manufacturing activities.

Pegging plays a vital role in maintaining order accuracy and fulfillment efficiency. When businesses can easily trace the relationships between customer orders and the corresponding inventory or production tasks, they can respond more effectively to changes in demand, allocate resources optimally, and minimize the risk of errors in order fulfillment. Overall, pegging is a valuable tool for enhancing supply chain visibility and control, contributing to more effective and responsive business operations.

FAQs

Yes, pegging is a common practice in supply chain management. It involves linking dependent demand and supply elements within the production process to ensure a smooth and coordinated flow of materials and resources.

Yes, pegging is instrumental in identifying the source of demand for a specific inventory item. By establishing links between the demand for finished goods and the corresponding demand for raw materials or components, organizations can effectively trace the origin of the demand within their supply chain.

Yes, pegging is a valuable tool for managing and prioritizing production orders. It helps organizations understand the relationships between different orders and allocate resources efficiently by prioritizing production based on dependencies and critical paths in the supply chain.

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