The Role of MBOM in PLM-ERP Integration

Today I want to talk about Manufacturing BOM (or how it is often called MBOM). Over the course of last few weeks, I shared thoughts about “solving for PLM and ERP”. Digital transformation and an increased complexity of products, brings the topic of connection between engineering and manufacturing to its highest level. This topic has different flavors and but always brings a lot of attention. It happens with large and small manufacturing companies. For SMB/SME it is often called as “how to send my CAD (computer aided design) data to ERP”. As complexity of PLM and ERP grows, you can hear it as following – “how to send my BOM from PLM (PDM) system to ERP”. And, with an increased complexity of the production and procurement landscape, the questions are about “synchronization Parts and BOMs” or “translation of PLM data into ERP” is more reflecting the problem description shared by customers. In my article Engineering to Manufacturing: EBOM to MBOM process, I collected some examples of how EBOM to MBOM process is solved by PLM and ERP vendors today (Note: If you think, I missed some of the examples and links to implementations, please share).

A traditional divide between EBOM and MBOM leads to many inefficiencies. All the questions I shared above brings me to the same topic – how to organize the data for manufacturing to reflect procurement, production planning, and traceability between engineering and manufacturing. The effectiveness of this process and decision process that companies need to follow in the intersection of engineering and manufacturing has become a pivotal aspect of achieving operational excellence.

In my recent articles about how to “Solve PLM and ERP” inspired by the discussion and work done by Prof Jorg Fischer and Dr Martin Eigner, I shared my versions of PLM-ERP integrations challenges. Check them out:

How to solve PLM and ERP – Part 1?

How to solve PLM and ERP – Part 2 (Implementation options)

In my blog today, I want to discuss reasons why companies might need to focus on MBOM and why it can be a possible approach to improve engineering to manufacturing integration.

Understanding MBOM and Its Importance

A long time ago, companies worked with drawings and the only BOM that exists in the company was a a single BOM (defined in MRP and later in MRP-II systems). Back in that time, companies send technical drawings to manufacturing and didn’t think about complexity of multiple BOMs. It was a time before 3D CAD systems were widely popular. Check my article Books about BOM where you can find links to books written by Dave Garwood back in 1990s. But the world is different now and manufacturing companies are facing an unprecedented level of complexity in engineering, manufacturing and supply chain.

As we move forward in the development of CAD technology and digital technology, 2D drawing CAD output is not what companies need to plan their manufacturing process. Electronic systems and software packages to manage complete and shippable products are everywhere and BOM management is a critical element of engineering and manufacturing environments. And MBOM is becoming very important in this landscape of technologies from CAD tools to tools that helps to define a virtual representation of complete and shippable product (digital twin).

Manufacturing Bill of Materials (MBOM) stands out as a critical element in this integration, ensuring seamless communication and data accuracy across the product development and manufacturing lifecycle. As much as CAD software leads the way the design concepts are done, EBOM provides a mechanism for holistic multi-disciplinary engineering system integration, MBOM is a key element in the solution to solve the problems of manufacturability, procurement, and contract manufacturing communication.

In a nutshell, the MBOM is a detailed list of components, subassemblies, and other materials required to manufacture a product. Unlike the Engineering Bill of Materials (EBOM), which focuses on the design and engineering aspects, the MBOM is centered around the manufacturing process, incorporating additional elements such as procurement details, assembly instructions, and quality control parameters.

It is not an unusual to get questions about how to organize MBOM and what should be included in MBOM. I shared some of the experience of working with companies and created my version of minimum viable MBOM creation. I recommend it to companies that afraid that MBOM is a complex process.

These things alone are super critical, but the key problem is that they don’t exists independently – on the engineering side, MBOM is dependent on engineering data. On manufacturing side, it related to many processes driven by ERP/MRP systems such as production planning options, plant or contractor specific data, supply chain and procurement.

The Key Role of MBOM in PLM-ERP Integration

To solve for “PLM-ERP” problem is to define how to integrate processes between engineering release and production and procurement planning. MBOM stands in the intersection of this process or how often called by manufacturing specialists – finding a way to translate PLM data into ERP data. Here are my five important functions MBOM can play in the “solving for PLM and ERP”.

1. Bridge Gap Between Engineering and Manufacturing: The MBOM acts as a link between the PLM and ERP systems, where EBOM data is translated into manufacturing and procurement planning. The absence of accurate MBOM opens the gap and prevents manufacturing team has access to accurate and up-to-date engineering information, reducing the risk of errors and mistakes. One of the primary challenges in PLM-ERP integration is maintaining data accuracy across systems. The MBOM provides a single source of truth for manufacturing data, ensuring that changes in design are reflected in the manufacturing process without discrepancies. This synchronization minimizes the chances of production delays and cost overruns.
2. Streamlining Procurement. Vendor Selection, and Inventory Management: MBOM is an engine the drives supply chain. Check my earlier article about MBOM and supply chain debates. The MBOM plays a vital role in procurement and inventory management by detailing the exact quantities of materials required for production. This precision allows ERP systems to manage inventory levels more effectively, reducing excess stock and minimizing material shortages. The MBOM provides comprehensive information on component specifications and vendor requirements, aiding in the selection of suitable suppliers. Furthermore, it fosters collaboration between manufacturers and suppliers, enabling them to work together seamlessly to meet production targets and quality standards.
3. Facilitating Traceability and Compliance: With increasing regulatory requirements and customer demands for product traceability, the MBOM ensures that every component used in manufacturing is traceable back to its source. This traceability is essential for quality control, compliance reporting, and managing recalls efficiently.

The question is what are possible ways to implement MBOM functions. What infrastructure and model industrial companies can put in place to connect engineering and manufacturing BOMs. Is it a function of PLM system, ERP system, or it is a new federated service or layer between both systems.

Implementing MBOM in PLM-ERP Integration: Best Practices

There is a no single standard way to implement MBOM. Existing landscape of implementation is divided between in existing manufacturing environment varies between placing MBOM in PLM system, translating EBOM to MBOM located in ERP system, or mix between these two approaches.

Here are are some technical approaches I can see in the industry now to support effectiveness of MBOM implementations.

1. Adopt a Unified Data Model: Data is a foundation of every integration. Therefore most of successful implementations relies on the unification of data model used for both bill of mateirlas EBOM and MBOM. Major PLM platforms are extending their EBOM functions to MBOM by offering a seamless way to build MBOM in sync with EBOM. For these implementations, a unified data model that supports seamless data exchange and eliminates silos.
2. Invest in Modern Cloud ERP Solutions: Existing MRP/ERP landscape is huge and diverse. The number, variety, and flavor or MRP/ERP systems is high. Many of them are old and not capable to support flexible data modeling, API capabilities and data synchronizations. Therefore, one of the approaches to improve EBOM-MBOM function is to invest into modern cloud ERP.
3. Prioritize Data Governance: Establish strong data governance policies to maintain data integrity and accuracy across PLM and ERP systems. The lack of unified data governance is a big problem for many companies where engineering and manufacturing is siloed and relies on “excel-ware” to pass data between systems.
4. Foster Cross-Functional Collaboration: Encourage collaboration between engineering, manufacturing, procurement, and quality teams to ensure that the MBOM reflects the needs and constraints of all stakeholders. For many companies a “batch excel send” is still a mechanism to send the data. As a result, the transition of EBOM to MBOM and procurement is way too late.
5. Leverage Modern Data Management Approaches: The data management made a huge advancement for the last 20 years, still when I see engineering to manufacturing communication, I feel like we are still 20 years back. Many modern data management approaches allows to build a layer above the systems, which can be used for analytics, semantic reasoning and AI tools. Utilize analytics and artificial intelligence to gain insights from MBOM data, optimizing production processes, and improving decision-making.

MES and MBOM

Speaking about MBOM, we cannot ignore the MES system functions. The Manufacturing Bill of Materials (MBOM) is integral to the efficiency and accuracy of a Manufacturing Execution System (MES). By detailing every material, component, and subassembly required for production, the MBOM enables precise production planning and resource allocation. This ensures that all necessary resources—machinery, tools, and labor—are optimally utilized, thereby enhancing productivity. Additionally, the MBOM’s role in real-time tracking and traceability helps identify and rectify discrepancies swiftly, maintaining high-quality standards and supporting seamless communication between departments. This unified approach reduces errors and miscommunication, leading to more efficient and effective manufacturing processes.

What is my conclusion?

The complexity of manufacturing demands better infrastructure and tools The role of MBOM in PLM-ERP integration cannot be overstated. MBOM is not simply connects two domains (engineering and manufacturing), but provides a way to optimize and connect processes such as procurement, contract manufacturing, supply chain, production planning.

For many organizations, MBOM process is a place of disconnect and lack of efficiency. By optimizing MBOM process and adopting best practices, collaboration and leveraging advanced technologies, manufacturers can harness the full potential of MBOM to drive their success in an increasingly competitive landscape. I believe the the divide between EBOM and MBOM soon will be a thing in the past. Check my thoughts about how to move from EBOM and MBOM to a Digital BOM.

In the words of Nathan Myhrvold (Microsoft CTO), “To think about the future, you have to think in the present.” Embracing the strategic role of MBOM today will undoubtedly pave the way for a more integrated and efficient manufacturing environment tomorrow. 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.