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Bill of Materials (BOM) Management Challenges

Posted February 02, 2017 12:47 PM by SavvyExacta
Pathfinder Tags: bom manufacturing

A bill of materials or BOM is often used in manufacturing. It can be challenging to track information and share effectively with all of the stakeholders. In this blog post, I'll explain what a BOM is and list some of the challenges.

BOM Definition

"A bill of materials or product structure (sometimes bill of material, BOM or associated list) is a list of the raw materials, sub-assemblies, intermediate assemblies, sub-components, parts and the quantities of each needed to manufacture an end product. A BOM may be used for communication between manufacturing partners, or confined to a single manufacturing plant. A bill of materials is often tied to a production order whose issuance may generate reservations for components in the bill of materials that are in stock and requisitions for components that are not in stock." - Wikipedia

A BOM can be modular (describing sub-assemblies), configurable (for multiple options), or multi-level (using parent-child relationships to list).

Items listed in a BOM might include BOM level, part number, part name, phase, description, quantity, unit of measure, procurement type, refrence designators, and notes.

Challenges of BOM Management

  • Tracking / managing changes required along the chain
  • Reconciliation and avoiding duplication
  • Configuration based around business rules for different products / processes
  • Tracking unused materials
  • Tracking for regulatory needs
  • Handling process changes driven by lean manufacturing or new order management systems
  • Customization
  • Level of detail required for different stakeholders
  • Whether to document consumables
  • How to attach related files, like CAD drawings

Does your workflow include a BOM? What challenges do you face?


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#1

Re: Bill of Materials (BOM) Management Challenges

02/02/2017 6:22 PM

BOM = Bonkers Order Management for build components.

Item 1 costs $1 and we use 3 - 5 per day every day for numerous contracts but order them 10 at a time because they are cheap and small so shipping is only $2 - $3 a set even though we could order them 1000 at a time for 20 cents a piece and get the whole bulk lot shipped to us for $100.

Item 2 costs $4,000 and we use at most 1 every few years but we order them 5 at a time to get a truck freight discount of 15%, for using a full size pallet on a order, saving us $105 shipping costs one time even though after 5 years the 2 - 3 remaining on the shelf will get tossed in the scrap bin due to be being a low stock rotation item and are nearing their NLA status regarding the original contract and follow up support agreement they were a part of.

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#5
In reply to #1

Re: Bill of Materials (BOM) Management Challenges

02/03/2017 10:22 AM

Are chitting me, one has to pay taxes on inventory.

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#7
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Re: Bill of Materials (BOM) Management Challenges

02/03/2017 11:06 AM

I don't follow your comment.

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#8
In reply to #7

Re: Bill of Materials (BOM) Management Challenges

02/03/2017 11:48 AM

It's basically an accounting ploy?

Impacting on Your Taxes. If you paid tax on your gross sales receipts, you would have a very high tax bill. By deducting the value-of-inventory figure, you reduce your taxable income by as much as 88 percent (assuming a 12 percent average markup for inventory). You only pay taxes on your profits.

  1. Your sales make your Total Revenue.
  2. Your beginning inventory plus the items you buy each year minus your ending inventory form your Cost of Goods Sold (“COGS”).
  3. What you have not sold by the end of the year valued at your cost, is your Inventory.

In short, your company must have a tax problems and looking to reducing it.

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#9
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Re: Bill of Materials (BOM) Management Challenges

02/03/2017 2:01 PM

I wouldn't know. I'm technical repair department not a office bean counter. How they justify things on paper and when t throw them away is not my problem.

My only concern is how do I acquire those obsoleted NOS inventory items for myself for as little as possible before they hit the dumpster so I can resell them at a substantial profit for myself later to those more intelligent people else who don't bow down to the false gods of inventory paperwork idiocy.

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#2

Re: Bill of Materials (BOM) Management Challenges

02/03/2017 3:01 AM

For us in nuclear field, we require some more typical info’s, like: material class/standard, main dimensions/rating, component dimensional/rating standard, supplier catalogue/drawing no., quality level, ASME Code class/non-nuclear, seismic qualification (if the case), specific data sheet (if the case), weight. The challenge is that the supplier is reluctant or goes on the easy way to provide the all requested information. The best approach is to attach to the engineering PR (Purchase Requisition), the BOM table header including all required info’s, so the potential supplier be aware upfront of all requirements.

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#3

Re: Bill of Materials (BOM) Management Challenges

02/03/2017 9:15 AM

BOM's are indeed extremely important to any one trying to build something repeatably. I, unfortunately, use a lot of drawings supplied by my customers and have seen very few of them that are accurate and/or complete enough to be able to fabricate what the customer wants. I'm not even talking "rocket" science here either, just what should be straight forward fabrications(at least to me).

Fortunately, I have been around long enough and worked enough different industries that I can interpret what is required and ask,politely(and sometimes withholding my laughter), intelligent questions of my customers to verify exactly what they need(not the same as want).

BOM's are only as good as the people who make them, and,,, these days it seems that all one needs to be called a "☻designer☻" are a few CAD courses and someone willing to hire you. It also appears that once hired, there is no further training given, and probably no guidance as well, as you are supposed to know what to do, at least in my current industry. I see it time and again, and can tell by who put their initials/name on the drawings of how close I have to scrutinize them and how much difficulty I am going to have in the fabrication stages.

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#4

Re: Bill of Materials (BOM) Management Challenges

02/03/2017 10:21 AM

We manufacture machinery. We do have a BOM for each machine, right down to the individual parts. We use IBM AS/400, that has been modified to keep track of all the material flow and labor and costs. The only challenges are for people that create the machines, to update as required when there are material changes and paying attention to unit of measure and to ensure that the right codes are set to identify the part as being made in house or outsourced.

We used to order extra parts to lower the cost of the parts. We've stopped doing that. It is better to pay a higher price for a lower number of parts and only ordering what you need because with all the extra parts that are carried over to the next year, you end up having to pay rent on that unused inventory which ends up costing more than what you saved on ordering extra parts.

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#6
In reply to #4

Re: Bill of Materials (BOM) Management Challenges

02/03/2017 10:51 AM

I know and can see your point about "common" parts. For me it all depends on my crystal ball of what I think we will receive for orders and then the good old fashioned "economic order quantity" calculation which includes the inventory carrying costs.

Updating is also very-no extremely- important and I am surprised how many companies/individuals just let those "minor" little things slip by, and then pay the consequences later. It may take some time to update, but it always pay off in the long run.

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#10

Re: Bill of Materials (BOM) Management Challenges

02/04/2017 2:28 PM

I used to be an assembly/technician on large mailing machines. The build order for each system included a list of options. The BOM was for the "stock" system and each option included a Put/Take list that the materials department would use to correct the BOM as required to maintain inventory accuracy. Since the price these systems ran well into 6 figures, and it was common for a customer to purchase more than one, it was also common for senior management, engineering and representatives from the customer to visit during construction to monitor progress and expresses concerns. It was one such meeting on one of my systems when the customer spoke of how the mail was not "driven" through an area where one option was not ordered and requested the situation be rectified. Unintentionally stepping on the toes of some of the engineers I spoke up explaining why this could not be done. A short while later the meeting ended and it was time for me to resume my work. Instead I walked off to the build area where that part of the machine was built and set about grabbing parts off of shelves, modified the base plate for that section and returned to the system. 15 minutes of engineering on the fly later and the system was up and running with the mail pieces driven as requested. Most of the people that were there for the meeting were still standing around the machine while all of this took place. Later that day my presence was requested in engineering. They needed me to mark up the drawing to the base plate reflecting my changes along with a Put/Take list reflecting my alteration. They needed to put together 3 kits to ship out immediately to the field for retrofitting systems in operation and informed me that all new systems going forward, without that option, would be built to "my" design. (Changes like this often took months to approve and implement but a real time demonstration leading to a very satisfied customer could move things along faster). While I understood how the BOM and Put/Take lists worked this experience gave me a much deeper appreciation for it all.

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