What are Bills of Materials
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The Bill Of Materials (BOM) is a detailed list that consists of all the component parts, sub-assemblies and materials together with the correct quantities required to produce and manufacture the end product. The BOM should provide an accurate description of what items the product is constructed from and, when combined with appropriate financial data, the true cost.
In using the BOM, understanding “the list of ingredients” it takes to produce the end goods, will assist the operational business activities from supply chain activities such as buying through to stock and inventory management. Having this information will simplify the estimation of parts and components needed to match demand (or forecast demand) and allow the business to respond appropriately.
When a company wants to increase or decrease output, using the BOM to drive the material requirements guarantees the correct amount will be ordered to fuel production. Where the BOM is inaccurate this can lead to manufacturing delays (waiting for parts) or excess inventory. Both of which results in cost.
Different Bill Of Materials for different uses?
With different stages of a products lifecycle (from development to testing through to production) companies commonly utilize different forms of BOM’s – they are all used in the same way but their robustness and their interface with operational elements like procurement vary.
Engineering bill of materials (often used in conjunction with an initial product configuration lists) are typically used during the product design phase. The engineering bill of materials continues to focus on the end product; however its role is to support the engineering team providing an outline of requirements. It’s common in this phase for the BOM to be incomplete or reference parts or materials that are yet sourced or designed. Engineering BOMs will typically not drive procurement activity but will be used in-house until such a time that the BOM is robust enough to be treated as a production BOM (i.e. the product has reached final design stage).
Manufacturing bills of materials are used to identify those parts required for manufacturing purposes – these are the most typical BOM’s and usually represent 100% of the product and its related components and are used within the forecasting process to identify to procurement which parts to buy and in what quantities.
In some industries (e.g. Aerospace) detailed bills of material often accompany the sales process. These Sales BOM’s identify the products as they are shipped (often down to component serial number level). This is often to meet compliancy requirements but also enables the end user to track usage and life expiry data). In some cases these BOM’s may not contain the full list of products but may only track those components that are required to be monitored during usage.
BOMS all have one thing in common, and that is they begin with the top level part (the saleable product) and then display all other parts using a parent child format. At one level (the parent) the end product—or sub-assembly item is listed, below that (the child) the sub components. when these parts are grouped, they create the end item.
The Modular BOM is another common layout. It is a method of developing a BOM for complex production items and those that need to make particular information about involved costs for every component and cost information of the various stages of sub-assembly. This can difficult. For example, data on the number of engineering drawings desired can be produced as well. However, using the BOM the information can be obtained and processed by the information systems as needed.
Summary
Bills of Materials are a common tool used in manufacturing organizations – they are used by many parts of the business from design through to supply chain and finally production. For BOM’s to be effective (and useful) they rely on robust and accurate data. Accurate BOM’s can drive efficiency and value – an incorrect BOM can spell disaster.
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[…] provided in the form of known sales and a forecast. This demand is exploded through the dependent Bill of Material (BOM) down to all purchased parts. At each level in the BOM, supply order requirements are […]