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 the mass-production world when the goal was to provide a large series of items with predefined configurations. Not anymore… Today, clients are interested in how to customize everything. Companies dealing with ETO type of business are facing similar challenges.
An efficient Bill of Materials management system can solve this problem. If you have a flexible BOM management system allowing you to manipulate BOM structures and integrated with your ERP environment, you are halfway done. However, technology out of the box won’t help you. It requires applying some best practices too. One of the practices I want to discuss is the “modular Bill of Materials”. Wikipedia provides 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 take some steps to improve your 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 a 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 a 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 the BOM management system, you operate with the ‘phantom’ feature to create an efficient master bill of materials. The reliability of the BOM management system is very important at this stage.
4. Create planning BOM. The 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 allow you to copy/compare structures and BOM levels are absolute musts to make it work.
5. End item bill. This is the final stage. End item bills represent the customer world and the way to translate the planning bill of materials into the delivery. There are multiple ways to create end item bills – create a 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 surprised many 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 the 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 the demands of customers for customization and keep product costs down. Just my thoughts…
Image courtesy of [Salvatore Vuono] / FreeDigitalPhotos.net
Disclaimer: I’m co-founder and CEO of OpenBOM developing a digital network platform that manages product data and connects manufacturers and their supply chain networks.