MAKE TO ORDER · PEG
How does MRP create order-specific supply?
MRP plans inside the individual segment when the MTO design requires it. The important question is not only whether a proposal exists, but which customer demand it covers and which lower-level requirements retain or release that relationship.
PROCESS ROLE
Read the peg decision
The sales-order requirement provides the planning signal. MRP nets it against assigned supply and creates planned orders, purchase requisitions or other proposals with the customer reference where the design calls for it. Individual versus collective treatment can differ by BOM level: an assembly may remain individually planned while common components are deliberately planned collectively, or the individual requirement may pass to lower levels. External procurement and conversions need the same reference discipline. When quantity or date changes, check the segment, proposal, firming and exception result before assuming the system will silently repair the chain.
DECISION MODEL
Separate the controls that determine the result
Each layer owns a different part of the MTO outcome. Diagnose the layer that made the decision.
Segment and strategy
Requirements class and material strategy determine whether demand and supply are individual or collective.
BOM-level treatment
The individual/collective indicator for assemblies and components decides where pegging continues and where common supply is allowed.
Proposal lifecycle
Procurement type, source determination, conversion, firming and exception handling determine whether a changed requirement can still be covered.
OPERATIONAL FLOW
What happens in SAP
Read the sequence as one connected business event, not as isolated transactions.
Plan in the correct segment
MRP evaluates the individual requirement, assigned supply, dates and lot-sizing rules.
Create dependent requirements
BOM explosion applies the approved higher/lower-level individual or collective treatment.
Create supply
In-house supply becomes a planned order; external supply commonly becomes a purchase requisition or schedule proposal.
Make supply executable
Conversion and firming create production or purchasing documents while retaining the intended reference.
DESIGN & CONTROL
What shapes the result
These controls work together; a locally correct setting can still produce the wrong end-to-end outcome.
Segment and strategy
Requirements class and material strategy determine whether demand and supply are individual or collective.
BOM-level treatment
The individual/collective indicator for assemblies and components decides where pegging continues and where common supply is allowed.
Proposal lifecycle
Procurement type, source determination, conversion, firming and exception handling determine whether a changed requirement can still be covered.
DIAGNOSTIC EVIDENCE
What proves the result
Use document, planning, logistics and Finance evidence together; one screen rarely tells the full MTO story.
Individual planning segment, sales-order number/item, MRP list or MD04 and pegging relationship.
Planned order, purchase requisition, dependent requirements, exceptions and conversion reference.
Before/after quantity or date changes, including firmed proposals and manual planner action.
MTO SCENARIO
Trace one customer requirement
A motor assembly is planned individually, while standard screws are supplied collectively. MRP creates a customer-referenced planned order and a purchase requisition for a special drive. When the requested date moves, the firmed drive requisition is flagged for planner action rather than silently detached.
- Pegging is visible
- BOM-level treatment is intentional
- Changes create an owned action
See how the customer reference moves across Sales, planning, production, inventory, delivery and Finance.