Bill of Materials (BOM) In Production Process

Bills of Materials (BOMs)

A Bill of Materials (BOM) is a fundamental component in defining the production process for manufacturing companies. BOMs play a crucial role in tracking and planning the components necessary for producing a product. They provide a comprehensive list of all components, raw materials, parts, assemblies, and their respective quantities required to create a finished product.

BOMs are essential for specifying the necessary ingredients or subordinate components needed to produce each item in production. In cases where a company produces only a few simple products, production can be manually scheduled, ensuring that the correct BOM parts arrive on the production floor at the right time and with the right resources.

Efficiently managing and tracking components and subcomponents is essential for companies aiming to optimize costs. BOMs establish the relationships between components and the final product or sub-assembly. This relationship definition is crucial for various tasks, including:

• Creating production orders
• Performing costing calculations
• Conducting item planning to ensure correct product purchases and production quantities at the right time
• Maintaining accurate stock levels
• Ensuring the use of correct components to produce high-quality products

Every item that needs financial accounting, either in inventory or during the costing phase, must be included in the BOM. The level of detail in the BOM depends on the company’s production and accounting requirements. For example, items like nuts, bolts, screws, and nails might be excluded from BOMs due to the higher cost associated with tracking them compared to their actual value.

It’s important to note that while BOMs define components and their relationships, they do not specify the sequence of steps for production or assembly; this information is defined in the route.

Product Concept

BOMs consist of products present in a company’s inventory. Here, we need to highlight product definitions, which are created independently of legal entities. Core attributes like product number, type, and name are shared across all legal entities in an organization. Some attributes can be overridden by a legal entity, while others are key definition attributes that cannot be changed except in the product definition.

• Product: A uniquely identifiable core product that remains constant; it doesn’t have associated product dimensions.
• Product Master: A standard or functional product representation serving as a template for configuring product variants. Variants are configured by selecting a configuration technology and can have predefined or configured options. Product masters are associated with one or more product dimensions.
• Product Variant: The configuration of a product master. Variants can be predefined based on product dimensions or configured using a product configuration tool.

BOMs can include items or service types, with specific variants in Finance and operations depending on whether the item is purchased or produced in-house.

Product Types in BOMs

Two primary product types are used in BOMs:

• Item: Represents products purchased or produced for manufacturing BOM items. The type depends on the Default order setting: Purchase order for purchased items or Production/Kanban for manufactured items.
• Service: Quantifies services integral to the manufacturing process, such as hours entered by resources for services performed during production.

BOM Line Types

Various BOM line types are used to categorize components and services:

• Item: Suitable for materials or services directly consumed without further explosion or pegged supply.
• Pegged Supply: This line type generates a reference production order for BOM line items during production order estimation. It’s used for signaling product demand requirements according to the method of production (lean or normal).
• Phantom: A placeholder for components occasionally used in the manufacturing process but accounted for in the master BOM. Phantom BOMs facilitate Master planning for calculating requirements.
• Vendor: Components purchased from an external vendor, with purchase orders generated automatically when planned orders are firmed. For manually created productions, purchase orders are generated during production order estimation.

This information can help manufacturers understand the significance of BOMs and how they relate to their production processes, product definitions, and inventory management.

Product Information Management > Bills of materials and formulas > Bills of materials

Here’s a rearranged version of the information about BOM features:

BOM Features

Version Control

• BOMs can have multiple versions with different effective dates.
• Older or unused components can be phased out using version control.

Sub-BOM Control

• Sub-BOMs can be sold or planned independently or alongside the parent production.

Subcontractor Support

• Automatically generate purchase orders to external vendors when running master planning.

Quantity-Dependent BOMs

• Control BOM versions used in production based on ordered quantities.
• Example: Use version 1 for orders fewer than 500 pieces and version 2 for orders over 500 pieces.

Multisite BOMs (and Routes)

• Parts of a finished product can be made at different production sites.
• Assign components to specific sites using different levels in the BOM structure.
• Corresponding routes must be defined based on site when using this feature.

Phantom BOMs

• Deduct from inventory only when a component is needed in production.
• Use the Phantom line type to explode lower-level BOM items when needed.
• Phantoms simplify the engineering process but should be used carefully for performance reasons.

BOM Versions

• Each BOM can have multiple versions with different attributes (dates, sites, quantity intervals).
• Versions link products to BOMs and enable item association with different BOMs.
• Active BOM versions are used for production orders.
• Versions can be approved, activated, and selected based on time, site, quantity, and product dimensions (e.g., color, size, configuration).
• Version control allows phasing out old components and introducing new ones.

BOM Levels

• BOMs can have single-level or multilevel structures.
• Single-level BOMs include immediate components for product assembly.
• Multilevel BOMs consist of sub-BOMs (level one) and their components (level two) and can have multiple levels depending on product complexity.
• Multilevel BOMs are often represented in a tree or outline structure.

Additional Notes

• BOM versions are essential for linking BOMs to products.
• Version control methods include date, quantity, and site control.
• Legal entities can create BOM versions for different sites and manufacturing processes.
• General BOM versions without site specification can support multiple sites using the same product ID.
• BOM levels vary in complexity, from single-level BOMs to multilevel BOMs with multiple sub-assemblies.

For detailed configuration and management, refer to the “Designer” tool under “Product Information Management > Bills of Materials and Formulas > Bills of Materials.”

This rearrangement provides a clear overview of BOM features, version control, and BOM levels, making it easier to understand the key aspects of Bills of Materials in manufacturing.

Product information management > Bills of materials and formulas > Bills of materials > (Select item) > Maintain > Designer

Regards,

Rakesh Reddy Pidi.