The debates about PLM and ERP about management of Bill of Materials are heating up. Recent years were remarkable with the number of complexities that coming together surrounding topics like supply chain, sustainability, increased regulation and cost analysis. MBOM and Ordering process is in the cross roads of these debates. The role of EBOM-MBOM connection or digital thread between engineering and procurement processes was never so important and complex at the same time. The intricacies of ordering, vendor selection, and procurement processes have long been critical to both small and large companies. Understanding how to navigate these processes efficiently can significantly impact a company’s success.
My attention was caught by Dr. Jorg Fischer’s insights on MBOM, this LinkedIn article explores why MBOM needs to managed “near ERP” brings back all debates about MBOM and how to “split the baby” or divide different aspects of product information between different systems. Check my old article BOM: The Apple of Discord between PLM and ERP and Adopting of Digital Product Model in place of multiple BOMs. There is more than 10 years between these articles, but the problem is still the same for many organizations.
I can see three challenges in every organizations (from very small startups and manufacturing companies to large enterprise OEM): data accuracy, seamless integration, and supply chain challenges. In my article today, I want to speak about challenges of the data and process management around MBOMs and thoughts about modern service architecture and composable architecture can solve them.
The Importance of Ordering Process
Ordering is a fundamental aspect for companies of all sizes. For small companies, efficient ordering processes can mean the difference between survival and failure. For large companies, streamlined ordering systems can enhance competitiveness and operational efficiency. In my experience, I can see how companies of any sizes are struggling with ordering processes. The connection between engineering design processes and order is essential and very often is broken. Regardless of size, the ability to manage orders accurately and promptly is crucial for maintaining customer satisfaction and ensuring smooth operations.
Vendor Selection and Procurement Process
Vendor selection and procurement are pivotal in the manufacturing and supply chain landscape. Choosing the right vendors can lead to cost savings, improved quality, and reduced risks. A robust procurement process ensures that materials and services are acquired in a timely and cost-effective manner, directly impacting production schedules and overall business performance. The logic of these processes remains consistent across companies of different scale, but the complexity and volume of transactions in larger organizations necessitate more sophisticated management solutions.
Similar Logic, Different Scales
While the core logic behind ordering, vendor selection, and procurement remains similar across companies, the scale introduces variations. Small companies might handle these processes manually or with simple software tools combining both engineering and procurement services (PLM+ERP), whereas large enterprises require advanced systems to manage their extensive supply chains (Integrating multiple PLM and ERP solutions). While solutions might look different, the fundamental logic in the same – finding right vendors, suppliers, following the transformation of engineering data to manufacturing and making it ready for order is essential. The systems to handle these processes must handle high transaction volumes, complex supplier relationships, and stringent compliance requirements.
Three Critical Elements of Efficient Supply Chain and Ordering
- Data Accuracy: Accurate data is the backbone of effective supply chain management. Inaccurate data can lead to errors in ordering, delays, and increased costs. Ensuring data accuracy involves regular audits, validation checks, and integrating real-time data updates across systems. You can find data accuracy problem working with small companies managing ordering with spreadsheets and large enterprise failing to seamlessly connect silos and therefore messing with part numbers, EBOMs and MBOMs.
- Seamless Integration and Traceability: Integration of various systems (PDM, PLM, ERP, SCM) ensures that information flows seamlessly across departments. Traceability allows companies to track materials and components throughout the supply chain, which is vital for quality control, compliance, and managing recalls. Finding a correct revision, connecting engineering information to manufacturing orders and procurement requires a better solution.
- Supply Chain Challenges: Modern supply chains face numerous challenges, including globalization, regulatory compliance, sustainability, and risk management. Addressing these challenges requires flexible and resilient supply chain strategies that can adapt to changing conditions and disruptions.
The Role of MBOM in Supply Chain
Dr. Jorg Fischer’s article on MBOM underscores its importance as the steering wheel of the digital supply chain. MBOM’s role goes beyond being a rearranged Engineering Bill of Materials (EBOM); it is crucial for supply chain control, enabling rapid responses to customer requests, building resilient supply chains, and managing sustainability and regulatory requirements. The connectivity between MBOM and ERP or supply chain management systems to leverage its full potential is essential. At the same time traceability to PLM and engineering information, seamless integration is critical too. PLM and ERP software vendors are trying to solve this problem for the last 20+ years.
Addressing the Key Aspects of Supply Chain and EBOM/MBOM Integration
To address the three critical elements of data accuracy, integration, and supply chain challenges, companies must adopt a modern approach. The longstanding debate on where to manage BOM—whether in PLM or ERP—has evolved. While companies are debating this topic for so long time, I think we are getting closer to how to solve this problem by focusing on data instead of software and using modern service architecture and composable applications.
Building Data Models and Composable Service Architecture of the Future
Composable architecture involves developing modular data services that can be easily integrated. Starting with small Product Data Management (PDM) services, companies can gradually expand to encompass procurement and more complex processes like EBOM-MBOM-SBOM. This bottom-up approach allows for scalable and flexible systems that can adapt to changing business needs.
The idea in a nutshell is to build a digital product model that is capable to contain the data related to multiple systems. The data can be partially synchronize and federated using data services. The flexibility of the product model is a key. Product Knowledge Graph is an example of such architecture. Combined with composable software architecture, it can solve the challenge of deciding “where to store MBOM”.
What is My Conclusion?
The debate on where to place the MBOM is ongoing and I can see the reason for these debates. Legacy PLM and ERP architectures is fundamental elements of the problem. These monolithic architectures are still in place in most of manufacturing processes. But the trust in monolithic architectures is fading together with increasing cost of maintenance and integration of these architectures. We need to stop monolithic thinking and move to the post-monolithic world with semantic data layers, graph-based product models and composable software architecture using online data services.
The trend is clear: modern data services and composable architecture are the future. By focusing on building robust, integrated, and flexible systems, companies can overcome the challenges of supply chain management and leverage the full potential of MBOM. This approach not only addresses current needs but also prepares companies for future demands, ensuring they remain competitive in a dynamic market.
Just my thoughts…
Best, Oleg
Disclaimer: I’m the co-founder and CEO of OpenBOM, a digital-thread platform providing cloud-native PDM, PLM, and ERP capabilities. With extensive experience in federated CAD-PDM and PLM architecture, I’m advocates for agile, open product models and cloud technologies in manufacturing. My opinion can be unintentionally biased.
