Grouping, Pegging, and

Distribution (GPD)

Richard Minney, Xansa

Rebekah Brooks, Goodrich Aerostructures
GPD Discussion Topics

• Introduction
– Why
– Where
• Basic Concepts
• Goodrich and GPD
– Limitations/work-arounds
• Extended Features
Why GPD ?

• Defense contractors and other project

based manufacturers recognize actual
cost to the contract from initiation
– Long term contract accounting
– Progress or cost-reimbursable billing
– Earned value
• Supply chain efficiencies require co-
mingled or consolidated replenishments
satisfying multiple contracts
– Economic make/buy lot sizes
– Netting and inventory re-use across projects
– Flexibility without heavy transaction load
So What ?
• Project stock provides financial control, but leads
to inflexible supply chains
– Sharing/transfer of stock or WIP between projects is manual
– These transfers can ignore lower-level assembly costs
– Individual lots are planned and owned per WBS requirement
• Plant stock provides supply flexibility, but lacks
contract specific financial control
– Cost recognition delayed until consumption to project-specific
activity
– Cost element visibility lacking
– Actual costing is plant-wide moving average
• GPD was developed to overcome this limitation
 GPD allows . . .

 Co-mingling, or grouping, of inventory,

purchases and production between multiple contracts (WBS)
– Logistical barriers can be applied for situations where contracts
cannot share stock/WIP for the same part number
– MRP, stores, purchasing all net across allowed contracts
 Supply chain replenishments are dynamically allocated /
pegged to originating contract requirement
– Actual supply chain costs are recognized at individual project WBS
from initiation
Actual quantity part flow in WIP to stores is recorded in the
background
– WIP or stockroom contract transfers are automatic and include actual
costs all the way down the bill of material structure
Where should you use GPD

Individual project stock is used for

Sales
activities within the network order
Actual / WBS

• Development and Test

• Pure make to order manufacturing Network

Use GPD for the “middle layer”

• GPD is good up to end item level for Production
orders
Co-mingled

PP based MTO production

Plant stock is retained for company Purchase
owned stock, hardware and low- orders

value material Production

• Minimal cash impact orders
• Actual cost unimportant
• GPD can be used down entire BOM
GPD at a Glance

• Basic Concepts of GPD

– Grouping
– Pegging
– Distribution
• How Does Goodrich Use GPD ?
– Limitations and work-arounds
Basic Concepts of GPD

• Grouping
– Grouping WBS element contains a collection of
individual WBS elements from various projects
– Requirements from these WBS elements are
planned together in MRP at the Grouping WBS
element
• Pegging
• Distribution
Grouping Overview

• Each individual WBS element

represents a cost bucket for a
customer requirement
• Replenishments are assigned to the
Group WBS
• Stock is managed under the Group
WBS
WBS Assignment to Group
• The transfer of replenishments
between WBS elements within a
MRP Group Assignment to Group Group WBS is automatic
• The transfer of stock between
Grouping WBS elements is manual
• Grouping supports non-valuated &
valuated project stock costing
• For greatest flexibility, assign MRP
Groups to the Group WBS
Grouping Approaches

Single Group Proj 001 Proj 001

WBS 001 WBS 002
• All materials assigned to a single
Group, regardless of plant or level
Group
• No Group to Group transfers required WBS 1
Proj 001 Proj 001
WBS 003 WBS 004

Multiple Groups Group

WBS 2
• Materials assigned to multiple Groups
• Group to Group transfers required to Proj 002 Proj 002
use inventory from another group WBS 001 WBS 002
• Improved run time through concurrent
processing
• Materials can assigned to a nested
Group
Nested Grouping

Proj 001 Proj 001 Proj 002 Proj 002

WBS 001 WBS 002 WBS 001 WBS 002
• Grouping strategy varies by
part down the bill of Group Group
WBS 1 WBS 2
material
• Narrower Groups (fewer
assigned project WBS)
Group Group
for high-level assemblies
WBS 1 WBS 2
• Broader Groups for
Group
lower level fabrications
and buy parts WBS 3

• MRP Group on material

master dictates Group
WBS assignment
 Basic Concepts of GPD

• Grouping
– Grouping WBS element contains a collection of
individual WBS elements from different projects
– Requirements from these WBS elements are
planned together in MRP within the Grouping WBS
element
• Pegging
– Replenishment elements are planned under the
Group and proportionately assigned to initiating
requirements (pegged to individual WBS elements)
• Distribution
 Basic Pegging Overview

MRP Actual
Historical
Results Stock/Issue
Pegging
(pre-read) Quantity

The pegging
• Pegging takes a algorithm ensures -
“snapshot” of all Pegging (1 plant)
requirements and  Every GPD
replenishments and replenishment order
matches the two in is fully pegged to
date sequence the originating
requirement’s WBS
Pegging so that all costs are
• Pegging normally Result distributed
changes with MRP but Inherit pegged

can be “fixed” to adopt

WBS from
parent to child  Projects which get
history where possible no pegged
quantities get no
costs
 Pegging Quantity Flow
Goods Movements update pegging tables for receipts and issues

Goods Receipt (Stock Table): M5 12 pc receipt (from supplier)

Material Plant Batch WBS Replenishment Unrestricted Quality Blocked

Object Use Inspection Stock
M5 2000 GRP-1 PO CONV05078 12 10 7

M5 2050 GRP-1 PO CONV05078 3

Goods Issue (Table): M5 2 pc to PP-Order 5670

Replenishment Receiving Object Quantity Unit  Pegging for issued parts

Object follows the Actual Quantity
flow in issues table
PO CONV05078 PP 5670 2 PC
 Cross Plant Pegging Overview

MRP Actual
Historical
Results Quantity
Pegging
(pre-read) Flow

Substitute inter-plant receipts

Pegging Pegging
Plant 1 Plant 2 for real replenishment from
supply plant

Supply plant replenishment is Delete interplant stock transport

pegged to next higher assembly Pegging
orders from pegging result
requirement in receiving plant Result

– Ensures original replenishment Track pegging in-transit

object (PP orders/purchase between plants
orders) is pegged to the original
requirement, regardless of plant
– Ensures actual costs are
distributed regardless of plant
 Cross Plant Pegging Example
Stock Transfer between Plants

M5

M5

M5

Production in Alternate Plant

M6

M6

M6
Cross Plant Enhancement

• IS-DI version 4.6c2 supports single plant pegging only

• Cross plant pegging is available via a multi-customer

developed enhancement
– SAP AG and SAP Labs provided technical oversight and assistance for
the enhancement
– SAP endorsed the concept of cross plant pegging following the successful
development and customer testing of the custom enhancement
– SAP Labs supports c46c2 with cross-plant pegging on an internal SAP
machine
– Customer must provide own support or pay partner for support in short term

• IS-DI Version 4.71 is enhanced to recognize the logistical

relationships between plants in pegging
X-Plant Pegging Comparison
IS-DI version 4.6c2
• Custom Cross-Plant
Pegging
• In-transit stock information
stored in Stock table at
goods issue
• Reversals are limited
• Pegging is in sending
plant until receipt and
status is “Stock”
• Custom modifications of
supporting transactions to
function for multi-plants
• Batch changes are limited
IS-DI version 4.71
• Standard Cross-Plant
Pegging
• In-transit information is stored
in an in-transit table
• In transit stock has pegging
status “In Transit”
• Reversals are fully supported
• Single step cross plant
inventory movement
supported
• View pegging exceptions
• Batch changes are fully
supported
 Basic Concepts of GPD

• Grouping
– Grouping WBS element contains a collection of
individual WBS elements from different projects
– Requirements from these WBS elements are
planned together in MRP within the Grouping WBS
element
• Pegging
– Replenishment elements are planned under the
Group and proportionately assigned to initiating
requirements (pegged to individual WBS elements)
• Distribution
– Cost distribution from replenishment elements
based on pegged proportions
 Distribution Overview
Distribution supports both non-
Non-valuated Flow valuated and valuated project stock
Purchase Order Grouping Project Prod Project  Both scenarios post to the same
PO: CONV050878
WBS-G-01 WBS-P1…
receiving object
Debits
M5 12 EA Debits
 In the case of valuated project
Material M5 3336.72
Material M5 556.12
$3336.72 Credits
Material M5 3336.72- Credits

stock, the average costs are posted

Line Items Table COEP
Spares Project
to the Group at goods issue; actual
PO/Item Objects Values Elements WBS-S7…. (Multi WBSs)
CONV05078 GRP G-01 3336.72 58988
costs are not maintained
CONV05078 GRP G-01 556.12 58988 Debits
CONV05078 GRP G-01 2780.60 58988
CONV05078 WBS P1 556.12 58988
Material M5
Credits
2780.60
 In the case of non-valuated project
CONV05078 WBS S7 2780.60 58988
stock, actual costs remain with the
Group after goods issue
 Distribution must be modified to
Distribution handles different types of values: support cross plant pegging
actual costs, commitments, payments . . .
Distribution Example
Distribution takes the actual costs associated with GPD replenishments and moves
them from the group WBS to the individual WBS from the pegging table

M5

M5

M5
GPD at a Glance

• Basic Concepts of GPD

–Grouping
–Pegging
–Distribution
• How Does Goodrich Use GPD?
 How does Goodrich Use GPD?

Work Breakdown
Structure
PP Orders

Material cost based

on actual production
& purchase order
cost

Actual costs posted to PP order and

reported at WBS element through
account assignment

Distribution of costs from PP order

to WBS element
Flexible BOM Structure
Deliverable
WBS assigned end item
PP Orders

Individually
planned
Actual
Cost

GPD planned
sub-assemblies
and bond panels

Group planned

Production order
components
Standard/ Make/Buy
to stock piece parts
Average
Cost Collectively Purchased parts
planned
Limitations

• Cross-company transactions
• Subcontract purchasing
• Sales returns
• Consignment inventory
• Re-order point / safety stock
• Make-to-order WBS transfers
GPD Summary

Proj 001 S/O S/O Proj 002

WBS 001 Delivery & WBS 001
Shipment

Group Group
WBS 1 WBS 2

Cost for 2 pcs

Cost for 1 pc

MRP
Requirement -1 Requirement -2
Replenishment +1 Replenishment +2
Group
WBS 3
Work Inventory
Execution Mgmt
Requirement -1
Requirement -2
Pegging for 1 pc Pegging for 2 pcs
Replenishment +3
Extended Features

• Valuated Stock
• WBS Breakpoints
• Surplus / Scrap
• Cycle-count Differences
• Group to Group transfers
• Archiving
• Serial effectivity
Valuated or non-Valuated ?
Valuated Project Stock
• Cost follows part in real-
time
• Pegging & distribution at
single level only
• Not an actual cost
solution
• Unproven
Non-valuated Project Stock
• Actual cost distributed to
project from initiation
• Distribution runs in batch
• Multi-level pegging &
transfers supported
• Proven/robust solution

Recommendations
• Use non-valuated for actual cost pegging
• Consider plant stock in place of
valuated/enterprise wide grouping
WBS Breakpoints

• Requirement
– Production costs need to be Custom Solution
recognized with greater granularity Auto-generate
than at contract/network level WBS break-points
– Costs to distribute to WBS elements - Fill in table
lower down end item structure - Based on
user field
• Solution
– GPD provides a break-point table to
influence pegging
– GPD provides a break-point call out
(BADI)
Surplus and Scrap

• Requirement
– Record scrap in storeroom and Custom Solution
production Peg to scrap or
– Peg scrap to original cause surplus WBS per
project (based on
– Peg surplus to canceling contract or usage)
share across all contributors
• Solution Copy confirmed
scrap fr. operation
– Option to peg surplus and scrap to to order header
default WBS
– Option to peg to based on contract
allocation for remaining on order
– Pegging call out provided (BADI)
Cycle-count Differences

• Requirement
– Recognize gains and losses against Custom Solution
appropriate WBS Assign dummy
– Capture actual costs where possible order for gains
for stock gains without a
corresponding
• Solution loss
– Pegging allocates actual
replenishments to losses (FIFO)
– Gains following a loss “re-instate”
previously lost replenishments
– Pegging call out provided (BADI)
Group to Group Transfers

• Requirement
– Facilitate manual transfers of stock Custom Solution
and WIP between Group WBS Multi-level transfer
(individual WBS
– Control stock availability between
assigned orders)
Group WBS (e.g. obsolete items
only) Transfer controls
• Solution based on user
parameters (NG)
– Transfer/loan borrow/payback (TBLP)
transaction provided for store-room TBLP mk 2 !
transfers
– Transfers are typically actual cost
Archiving

• Requirement
– Remove replenishment, pegging Custom Solution
and cost data for shipped/closed Standard solution
projects from batch runs untested/unproven
– Improve long-term pegging and
distribution performance
• Solution
– Use more Group WBS with limited
group to group transfers
– Avoid large lot-sizes
– Future development in progress . . .
Serial Effectivity

• Requirement
– Control changes and configuration Custom Solution
by end item for GPD planned Assign reservation
materials batch based on
– Track serial numbers used in allowed effectivity
process and configuration
requirements
• Solution
– Combine parameter effectivity, single
unit lot sizing and batch/serial based
tracking solution in storeroom
– Roll part number up to individual
project stock level for each change
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Session Code: 3205