Bill of Materials. Probably the key element in product development and manufacturing. Surprisingly enough, many companies are still struggling with this topic. Bill of Materials drives lots of controversy and discussions. Why it is so important? On a surface, you may think BOM is a really simple thing. Just a list of components. However, if you think about product development, BOM is a recipe for a product that you are designing, engineering, manufacturing, supporting, and disposing of. I’ve been thinking about modern trends – cloud, social, mobile, consumerization, and others. In my view, they are going to impact the Bill of Materials management functions in a much radical way than you may think initially. Today I want to focus on what I call 3 modern challenges affecting and impacting the Bill of Materials.
Challenge 1: Internet and lean manufacturing processes
The Internet is probably the biggest change that happened to us during the past 20 years. It drives changes in the way we work. Connected and lean. Lean processes mean a simplified process organization in a company. Ordering systems are changing as well. Simplified materials flow and reducing of shipped items and prefabricated assemblies create different requirements to BOM functions. BOM hierarchy becomes less important. The completeness of BOM during the process sometimes not required and sometimes can be managed on-demand driven by online ordering systems. The main two elements of functionality – BOM structure and approval process are disrupted now. The number of bills can be increased, at the same time, since the number of orders will be growing as well.
Challenge 2: Customization and “new makers”
There is a strong trend to personalization and customization. It comes everywhere – electronic, computers, fashion, etc. To manage all possible configuration becomes very critical. The number of configuration can grow significantly. The flexibility of systems needs to be increased. What yesterday was true for ETO (engineering to order) company only, today becomes a reality for many mass manufacturers. In most cases, you will need to create a separate BOM for each customer order. “New makers” – companies that are capable to manufacture a small amounts of very specific products are trending as well. People like to be unique products. The new manufacturing firms (sometimes very small) are experiencing additional pressure on how to proceed with the design and manufacturing. Large and complex BOM/PLM systems cannot help them.
Challenge 3: Granularity and contract manufacturing
Price competition leads companies to find somebody else to produce some of the components. It leads to outsourcing, offshore, and many other options to make the same work in a different place. The Bill of materials is a critical element in supporting of contract manufacturing. You need to have an ability to organize BOM in a way that allows you enough granularity and at the same time makes engineering and manufacturing BOM much simpler. The ability reconcile multiple bill of materials and support new type of change processes becomes even more important.
What is my conclusion? The Bill of Materials is a critical element in the success of many manufacturing companies. Think about driving maps. In the past we printed it on a paper, folded, and put next to your driver seat. Now it is different – social GPS systems can alert you about driving conditions and suggest alternative routes. You need to have a new tool to manage BOMs. Traditional BOM management systems won’t survive in a modern manufacturing world. This is a wake-up call for PLM vendors and other software companies in the manufacturing world. Just my thoughts…
Image courtesy of [jsccreationsz] / 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.