The first step in getting manufacturing started is to create a bill of materials (BOM). In layman’s terms, a bill of material is a source of information containing all the list of input components or items to manufacture a product.
A BOM is used in the Process Manufacturing environment for packaging. To make the product, e.g. a strawberry jam, a reagent, detergent chemical, etc., formula or recipe is used. The Packaging of the product, i.e., jam or reagent or a detergent into a container like bottles or sachets or wraps, requires a packaging bill of material definition. This is an example of the Mixed Mode Production process.
A BOM comprises a list of components, labor, equipment or tools, and the associated overheads. Operational stages, any other pertinent information needed to get to the finished product, as well as the quantity required by each of the entities define them.
BOMs are hierarchical, which means they can have numerous levels of definition. For instance, one can pack bottles into boxes or cartons, which can be again packaged as pallets. BOMs can be customer-specific if it’s a contract manufacturing or private labeling scenario. Wherein they can create the customers’ branding-based BOMs for the same product. BOMs can have multiple revisions or versions.
Just like the Formula or Recipe profile, BOMs are one of the most crucial documents in any manufacturing or material requirements planning (MRP) cycle since they act as blueprints for your final products.
Usage of Formula’s Co-products & By-products when you receive multiple outputs from Production
A formula is a type of bill of materials that are commonly used in process manufacturing. It includes co-products and by-products. It is in conjunction with the manufacturing of the main product.
In order to define the co-products and by-products in an accurate impression, you’ll need a formula.
Classification of the Container Elements
The packaging components may have their attributes like Package Construction, Fitting Types, Color of the Packaging, Dimension Specifications, Closure linings, Seal types, Closure Types, thickness, brand names, manufacturer, etc. The ERP software documents these elements specifically.
Bill Of Material and Formula/Recipe Versions
A process manufacturing software allows you to maintain multiple revisions or versions with effective dates. You must construct a BOM version or a formula version to link a certain BOM or formula to a product variant that is manufacturable.
Validity Period, Stage of Product Development, Plant/site, particular product specifications, costings, and other characteristics can be the reasons for creating a new BOM and formula revisions. Additional essential attributes in formula versions also include yield, co-product, and by-product specifications.
Approvals/Sign Offs of BOM and Formula/Recipe versions
You can configure a Formula or a BOM version to pass through multi-level approvals or sign-offs on changes. You must authorize configured approval before using them in the planning or production process. Depending on the user’s choices and authentication rights, you can approve the corresponding profile and a Formula/Recipe and BOM version.
Multilevel Packages in Manufacturing
Manufacturing companies require a multi-level BOM with a complex manufacturing process comprising subassemblies.
The hierarchical BOM frameworks in your multi-level BOM will display your end product at the summit, in addition to your SKUs, part specifications, numbers, prices, and any other parameters.
A multi-level Bill Of Material ERP resembles that of a lineage, and it lists all of a product’s parts and components. Each BOM level will list all of the parts involved in creating a parent item, either directly or indirectly.
Inner & Outer Packaging
- Inner packaging: It is packaging that necessitates the use of an outer container for transportation. This is especially true of “combination” packing.
- Outer packaging: The exterior covering of a combination BOM packaging, as well as any absorbing materials, padding, or other components required to confine and protect inner receptacles.
Embedded Costs of BOM
A list of purchased selected items used in a standard cost Bill Of Material calculation:
- Component Item Costs
- Associated Overheads for the Components
Basic cost BOM calculation includes the information of the following manufactured items:
- Standard inventory order quantity
The following items are inclusive in the bill of materials software information used in a BOM cost calculation:
- Component item quantity
- Components overheads
- Labor costs
- Labor overheads
- Tools or equipment usage costs
- Equipment overheads
- Consumables costs
- BOM subcontracting or outside processing costs
- BOM Additional labor like fixed, setup, or variable
The following operations resource data used in a basic cost BOM calculation:
- Hourly costs
- Per unit costs
- Override costs
The following manufacturing overhead data for calculating the conventional cost BOM:
- Administrative overheads
- Transfers between Warehouses or between locations
- Quality control overheads
Embedded Quality Control
The embedded quality control system of the product manufacturing process provides advanced assistance. It assists between current production and the quality management team. Once you have defined how to make a bill of materials, you can use the system to collect to ensure product quality.
BOM Material Routing
The Operational Routing definitions goals are as follows:
- Determine all the tasks that go into making a product.
- Identify the tasks’ material, labor, equipment, or tools.
- Determine the sequence of task-related operations to be performed.
Outsourced Vendor Production
The typical system generates manufacturing orders automatically from a Sales Order. One can enter the externally produced item in the next higher assembly BOM. Also, the cost is included in the costing section as outside processing cost.
Importing BOM from Excel
A cloud-based BOM management system gives a fresh perspective in the manufacturing window, including presenting grid modes in a suitable name for the view.
- It provides a lot more information on the BOM details in an easy-to-read grid style.
- It’s not essential to delve into the details of the BOM card.
- Excel can import and export BOMs.
Comprehensive Overhead costs in BOM
Although you incur overhead through a costing sheet or route, you can also incur it through additive costs. The cost component structure divides the cost of material into relevant “components” as defined by the business users, such as material, labor, overhead, subcontracting labor, and so on.
When you cost a material, the entire cost of the material splits down into its numerous components in compliance with the cost component structure.
BOM’s Lead Time Calculation
The information you key in during the profile definition can calculate the manufacturing times. In order to calculate the total time required to make the BOM, you can use the lead time to manufacture, SOP time, labor hours, and machine usage hours. Notwithstanding whether you actively update an item’s lead times, the computation changes the manufacturing product’s production time.
For prerequisites for time calculation, you’ll need to
- Create a bill of materials for the parent item as well as any production time computable member products.
- Make an operational/routing line marking that affects the time plan for every item used in the time computation.
- For the primary item whose delivery time is to be calculated, you should additionally specify a delivery times volume.
Configure Audit Histories
Validation and auditing teams oversee that the information in Configuration Management is correct. They ensure to identify and document all Configuration Items (CIs). You can either manually complete the process or take assistance from the software.
The goal of the Configuration Management bill of material validation and auditing is to discover and handle any deviations. From configuration policies, procedures, or methods and safety and license use rights.
The verification process guarantees that configuration data are correct and comprehensive. It identifies any unapproved or unrecorded changes. Configuration audits aid in maintaining the integrity of the system.
Track WIP Yield
The cost of acquiring a product influences the cost of manufacturing it (e.g., raw materials, labor, and production). As a result, knowing your ending WIP inventory is crucial for inventory management.
Work-in-progress (WIP) inventory refers to partially finished materials in the middle of a production cycle. The entire cost of unfinished goods currently under development is WIP in production and inventory management.
During the manufacturing process, you can substitute materials in three ways:
- When one substance is substituted for another after a certain date, it is referred to as “by date.”
- If in case material in a formula is replaced with various materials because it is out of supply during a structural plan.
- When a material goes out of stock suddenly amid production and replaced with a new material.
Report BOMs as finished
Bills of materials (BOMs) are reported as finished using the Report as finished and Max. report as Finished pages. The method for reporting a BOM as completed is essentially key to the pattern for reporting a manufacturing process as completed.
You can report several BOMs as done in a batch using the Report as a finished page. Using the Max report as Finished page, you can report only one BOM as completed.
Vijay comes with a vast experience in ERP and enterprise solutions space with about 20 years of experience in various packaged application like Acumatica, SAP, Orion, Salesforce.com, SugarCRM and, SalesLogix.