This week we went over information in planning resources and what goes into these processes. It’s a pretty broad topic, so I decided to focus on the bill of materials. The bill of materials is essentially a detailed list of instructions that has a list of all the parts, items, assemblies, and sub-assemblies that are required to build a complete product which can then be shipped customers. A vague or incorrect BOM will cause problems down the line, varying from small to massive in scope. These issues can be extremely costly, whether that is in capital and labor resources or in time wasted. There are many different types of bill of materials, so I found three to explain that will show up pretty often.
Engineering Bill of Materials
The engineering BOM defines the finished product as it was designed. This BOM is often organized by engineers based on a computer-aided design drawing. It is entirely possible that there is more than one engineering BOM created. It will let anyone involved in the supply chain exactly what to purchase, how to purchase and where to purchase all the raw materials and part required for the product. The bill of materials will be used by many departments and not uncommonly at the same time. This requires the document to be as quality as possible. It has to be as detailed, clear, and accurate as can possibly be to ensure the efficiency and cost-effectiveness of the product. Any problems in the document here could cause quantities of materials to be mis-ordered for example, which would lead to production halting. The company would then either have to wait on the missing parts or start on another production order.
Manufacturing Bill of Materials
The manufacturing BOM contains all the parts and assemblies required to build a complete and shippable product. Packaging materials that are needed to ship the finished product are included here as well. This BOM is where all the information required for manufacturing activities is stored. An MRP (material requirements planning) system would take the details from the manufacturing BOM and would calculate whether materials are needed to be purchased and when the manufacturing order needed to be started. This BOM can also have a validity date range. This means that if the company wanted to test a product, they would restrict the use of a specific BOM to a month or two. Then, if the product needs to be modified, they can change the current BOM and establish a new validity date.
Configurable Bill of Materials
The configurable BOM is for a finished product that needs to be changed for a specific requirement by a customer. This BOM contains all the components that are required to manufacture the material for a customer’s specifications.
These are some specific types of BOMs and there are many more out there, depending on what a business needs to accomplish. The level of detail required in these documents is immense, and so there are companies out there which provide services to help other companies create BOMs and more. SAP is one of those companies, and on this cite (https://blog.vision33.com/bid/90172/sap-business-one-production-4-types-of-bill-of-materials-explained) their types of BOM that they can create through their software SAP Business One are explained. The software costs about $1,400 as a one-time fee, then $410 per user/per year for a subscription. I wonder if this cost is too high for some companies to use, and if that’s the case what is their alternative?