Linking Production Orders for Pegged Supply Components in Microsoft Dynamics AX 2012

Editor's Note:  As the fourth of a four-part article, Dr. Hamilton examines one variation of linked orders in common S&OP scenarios, and also summarizes the series of articles.  Dr. Hamilton will be covering these topics as part of his speech at Convergence 2014 in Atlanta.

A make-to-order component is typically employed in a make-to-order production strategy, where the production order for the component is closely linked to the parent item's production order.  This linkage supports automatic synchronization of production orders for make-to-order components after updating the parent item's production order.  Within Microsoft Dynamics AX 2012, you designate the make-to-order component with a line type of Pegged Supply in the BOM or formula information for the parent item.  The terms for a pegged supply component and a make-to-order component can be treated as interchangeable, and their associated production orders are termed reference orders within AX. 

There are several advantages for automatic synchronization of reference orders to reflect changes in the parent item's production order. This article summarizes the two major advantages in synchronizing (1) changes in the order status and (2) changes in order quantity or date.  It also reviews the impact on planned production orders for make-to-order components, and discusses the similarity in reference orders for buy-to-order components.  The article starts with a summary of reference orders for pegged supply components.  For simplicity's sake, the explanation employs the AX terminology for BOM items and their related production orders, although it also applies to formula items and batch orders.

Summary of Reference Orders for Pegged Supply Components 

A make-to-order component is only produced when needed for the parent item's production order.  Stated differently, the production order for a pegged supply component ...