Bill of Material (BOM) is a production blueprint that defines the components, quantity, units and processes needed to make a product. One wrong quantity, revision or missing part can lead to material shortages, overstocking, production delays and wrong product cost.
These risks are mitigated with modern erp software solutions which seamlessly integrate BOM records with inventory, purchasing, production and costing workflows.
Causes of BOM and Material Errors.
Often, BOM errors start when the BOM is part of an disconnected spreadsheet, updated manually, or there is inadequate revision control on a BOM. If engineering, purchasing, warehouse and production teams are using different records, and even a small change is made, there can be discrepancies down the line.
Here are some common BOM errors:
- Incorrect component quantities
- Duplicate or redundant items
- Using inappropriate units of measure.
- Uncontrolled BOM revisions
- Missing substitute components
- Manual data-entry mistakes
These mistakes may go undetected until the production begins, at which point they can become more costly and problematic to correct.
Centralise BOM Data
The initial thing is to establish a controlled master record for every product. The ERP centralizes the approved structure in a central database, instead of keeping separate BOM files.
Relate BOMs to product Masters
A well defined BOM can include all of the following: component codes, quantities, units, scrap allowances, operations, and production versions. This information can then be directly fed into orders for manufacturing.
An erp manufacturing software uk platform can integrate the BOM to inventory availability, procurement needs and production planning. The system can automatically determine the parts needed with the approved structure when the production order is created instead of using manually copied spreadsheets.
Control BOM Revisions
Frequently, products undergo change due to engineering improvements, product substitutions by suppliers, reduction in costs or due to regulatory requirements. Production teams can easily produce against a different BOM without having revision control.
Maintain version-controlled structures
Versions of your BOM can be kept in the ERP system with effective dates, approval status, and revisions. This enables the business to decide whether a particular production order should take any particular structure.
Useful controls include:
- Revision numbers
- Effective dates
- Approval workflows
- Change history
- User permissions
- Previous-version visibility
This will provide a traceability link between a product change and the production orders that have been impacted.
Use the Validate Materials Before Production
The accuracy of BOM is closely related with material availability. Having a technically correct BOM doesn't mean that there won't be production issues if components are missing or misclassified.
ERP can also check the availability of and the expected inventory against the BOM requirements before a work order is released.
Check material availability
The system can recognize:
- Insufficient stock
- Reserved quantities
- Incoming purchase orders
- Alternative materials
- Required procurement quantities
This enables the planners to detect any shortage before the production process starts and not at the production workstation.
These checks can also trigger purchases and restocking processes with erp software solutions, minimizing the risk of emergency purchases.
Automate Material Requirements
Manual material calculations will be more difficult if products have hundreds of components or if there are multiple levels of assemblies in production.
Create MRP links to BOMs
With BOM structures, production schedules, inventory, lead time and open orders, Material Requirements Planning (MRP) can be used to determine future material requirements.
For instance, when there are 500 finished goods to be produced, and each finished good has 4 components required, the system can compute the gross requirement and make a comparison with the current and inbound Inventory.
This cuts down on the amount of calculation that goes on spreadsheets and gives purchasing departments a firmer grounding on which to base procurement.
Avoid Material Misuse
Material error can still occur, possibly because the wrong part is issued on a production order, even if the BOM is correct.
Incorporating material issues into work orders can enhance the shop-floor control provided by an erp manufacturing software uk system. Operators can confirm that the correct material is being issued using barcode scanning, item codes, batch numbers and warehouse locations.
This establishes a record of transactions from the warehouse through to the production consumption.
Track Substitutions and Scrap
Occasionally, material substitutions need to be made during manufacture due to materials being unavailable, changing specifications or changes by the supplier. The changes are not to be undertaken on an informal basis.
ERP can record approved alternatives while maintaining visibility of the original BOM.
Likewise, there may be scraps considered in material planning where there are predictable losses in production processes. This real consumption can then be compared against normal consumption to find out if there are any significant deviations.
Connect BOMs With Costing
Product costs can be directly impacted by the BOM changes. More of a high value component, a change of supplier material or additional operations can affect manufacturing cost.
If BOM, inventory valuation, labour and overhead are linked, management will be able to better understand the cost impact of a product revision.
This aids business owners separate a regular product cost from the real production variance.
Develop robust BOM Governance
Rules of ownership and approval must be clear with technology to be effective. BOM structures should be defined by engineering or product teams as to who can create, modify, approve and retire the BOM.
A good governance model will consist of:
- Controlled BOM creation
- Role-based editing permissions
- Formal revision approval
- Effective-date management
- Audit history
- Regular BOM reviews
Sowaan ERP can help this integrated model by linking product structures to inventories, procurement, production and finances.
Conclusion
To ensure accuracy of the BOM, more than maintaining the correct component list is required. The manufacturers require controlled revisions, material validation, MRP integration, production traceability and reliable costing.
ERP software solutions help to streamline these processes, eliminating manual calculations and minimizing the risk of BOM changes creating production mistakes. An erp manufacturing software uk can offer a seamless data management system for UK manufacturers to manage materials from planning to production.