BOM 101: How to modularize the Bill of Materials

BOM 101: How to modularize the Bill of Materials

I want to get back to my BOM 101. In my view, Bill of Material management is one of the fundamental processes in PDM/PLM and requires lots of attention. I want to take the feedback made by Jos Voskuil and turn the conversation to be more business oriented. One of the trends in manufacturing today is customization. And this is a big challenge for manufacturing companies. Life was good in mass-production world, when the goal was to provide large series of items with predefined configurations. Not anymore… Today, clients are interested to how customize everything. Companies dealing with ETO type of business are facing similar challenges.

Efficient Bill of Materials management system can solve this problem. If you have flexible BOM management system allowing you to manipulate BOM structures and integrated with you ERP environment, you are half way done. However, technology out of the box won’t help you. It requires to apply some best practices too. One of the practices I want to discuss is “modular Bill of Materials”. Wikipedia provide a very short article about that, but I liked the definition.

Modular BOMs define the component materials, documents, parts and engineering drawings needed to complete a sub-assembly. While the terms BOM and modular BOM are most commonly used in association with physical products, the concept can be used in a variety of industries (e.g. software, medical records). Modular BOMs are used by modern information systems to serve a variety of purposes, such as defining the components needed to produce a sub-assembly, and providing cost information for each component and “rolled-up” cost information for the overall sub-assembly.

The core idea of modularization is to create a set of “modules” (aka sub-assemblies) that you can manipulate in order to create a final product. The product development process will be divided into two essential steps: create your modular bills and create a planning bill for a specific product. The last one will allow you to roll out cost and delivery time for a specific product order. Below I put five steps to follow in order to modularize the process of Bill of Material management in your company.

1. Identify family groups. This work can take time, but will allow you to make some steps to improve you product portfolio. Most probably you already have some portfolio management tools in house. Engineering has a tendency to complicate everything. So, you may find an overwhelming number of product families in your company. So, you must take some time and optimize that.

2. Identify options. These are elements of products and bill of materials that can be added to multiple product families. Usually represents additional features that can be added and can be replaced. The typical example of options is different configuration of car in-dash navigation and entertainment system. What is also important at this stage is to identify constraints between options (conflicts, incompatibilities, etc.)

3. Create Master Bill of Materials. This is a very important step. Master Bill of Materials represents all families and all options. This is “THE” bill of materials of all your products, which allows you to plan and to manufacture any product and configurations. In most of BOM management system you operate with ‘phantom’ feature to create an efficient master bill of materials. The reliability of BOM management system is very important at this stage.

4. Create planning BOM. Planning bill of materials represents a specific product, configuration, order, etc. You generate “planning BOM” out of your master BOM in order to create a specific delivery task for your manufacturing system. You practically derive your planning BOM out of Master BOM. Tools that allows you to copy/compare structures and BOM levels are absolute must to make it work.

5. End item bill. This is a final stage. End item bill represent the customer world and the way to translate planning bill of materials into the delivery. There are multiple ways to create end item bills – create bill for every SKU#, manually configure options or implement automatic rule based configurations. In my view, the last one is the most promising alternative. However, it requires additional efforts to implement. So, don’t be surprise many of customers are manually configuring end item bills.

What is my conclusion? Modern manufacturing practices require good technologies and best practices applied together. To me, BOM modularization is one of best examples. You need to have an efficient BOM management system with technologies and user experience allowing you to work collaboratively on BOM in a very granular way. At the same time, you need to apply some planning steps to rationalize and optimize the way you work with configurations, custom orders and product customizations. The cost is a fundamental driver in a modern manufacturing world. An efficient BOM modularization will allow you to follow demands of customers for customization and keep product cost down. Just my thoughts…

Best, Oleg

Image courtesy of [Salvatore Vuono] / FreeDigitalPhotos.net

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  • Hartou

    How you create modular BOM with Plastics bag manufacturing where you can have thousands of option. Right now we have more than 11, 000 items.
    I will try to create modular BOMs and any hint will be appreciate.

  • beyondplm

    it is a good question. How do you identify your “configuration” (option)?

  • Hartou

    I am working on that question , I could get back with the solution sometime today. If I succeed , I could change my machine (work center) selection model to take into account modular BOMs.

  • beyondplm

    I’d very much interested to know what decision you took. this is not a simple one :)… usually configurations better be resolved dynamically. modular is a bit older approach IMHO.

  • Hartou

    Hello,
    I finally did it using configuration but this is just for planning purpose. We have a Product Builder (Module within our ERP system) that creates BOM base on the configuration entered by the customer. For this is reason, I think there is no reason to redesign a modular nor configurable BOM.
    The main problem was us, we needed to understand that we could not do the maintenance for thousands of BOM but make sure that the recipes and constraints are fully optimized when the Product Builder builds a new item.
    I did nevertheless propose that we should attach each configuration to every customer that request it. But this idea was not approved. Because we already have a software that can manage thousands of Items without any issue
    Finally, the good outcome from this research is that I can use this modular approach to plan work centers capacity reservation.
    Thanks
    Julien

  • beyondplm

    Julien, you are welcome! Usage or ERP based configurator can be clearly possible option. But as you said, maintenance and overall cycle kills it. A better option is to have a tool that can diversify BOM usage between manufacturing and other options.

  • Fredrik

    Hi! I am currently writting an essay about modularBOM and Configurable BOM. But one thing I dont understand is when I should use modular and when I should configurable BOM? Does anyone have a good answer or any tips on source where I can find additional information?

  • beyondplm

    Fredric, I think these options are not mutually exclusive. You can create “modules” and use configurable BOM options to combine them together. Fundamentally, you want to achieve reduction of “end BOM items”… Does it make sense?

  • Fredrik

    Thanks for the reply, it makes some sense but still some queries. A modular BOM is thus more used for creating the sub-assemblies than the finished/item product? It is the configurable BOM which combine the modulars to the finished item/product? Or can a modular BOM also be used to create the finished item/product? The description of bill of material on wiki does not really help me to figure this out!

    If it should work like above, for example when it creating a BOM for a PC, should it not be easier to don’t have assemblies creating it, just a product structure consisting of several items (I assume that a assembly consist of >1 item). Because if you use assemblies, there would be millions of combination where the producer need to define the BOM for, but when using items (instead of assemblies) when creating the BOM for the PC, you only need to define each possible item and then use them as combinations to create the PC as the customer wants? I hope you understand my point and would appreciate an answer to make my understanding even better! Thanks!

  • beyondplm

    Julien, thanks for sharing your experience. Does it mean you ERP module can manage “configurable components” and not “final thousands” of BOMs?

  • beyondplm

    That’s correct- modules are used to create “component” that can be used as “building blocks” for options. That should allow NOT to create zillions of end items BOM for every configuration before. You can create end item BOM only when product is built and shipped.

  • Srinivas Sekha

    I think these are the main puzzles to solve :

    You need to have an efficient BOM management system with technologies and user experience allowing you to work collaboratively on BOM in a very granular way.

  • Srinivas Sekha

    Along with the efficient BOM management system, we also need to take the config rule maintenance system also into consideration during the design phase

  • beyondplm

    Srinivas, thanks for this comment! BOM tools are available in many systems – PLM, ERP, etc. Do you have any specific scenario you think “collaborative” character of BOM would b helpful?

  • beyondplm

    How is it different from tools like RuleStream (acquired by Siemens PLM)?