Bill of Materials – What, Which, Where, When, Why and How?
In today’s world, Bill of Materials have become a very common terminology that is used under different context to mean a completely varied objects. I have been trying to dig into the etymology of BoM to conclude on the definition of Bill of Materials.
Based on the limited googling and the availability of information online and some additional references, the definition of BoM seems to have been derived from Accounting philosophy where the definition of Bill of Materials is – Listing of all the assemblies, subassemblies, parts, and raw materials that are needed to produce one unit of a finished product. Thus, each finished product has its own bill of materials. The listing in the bill of materials file is hierarchical; it shows the quantity of each item needed to complete one unit of the next-highest level of assembly. Source
This was the first definition of Bill of Materials which was actually derived from another accounting Jargon called the Standard Bill of Materials which stands for Listing of the standard quantity per unit of each item of material going into a unit of finished product. It should be adjusted for unavoidable waste, spoilage, and other normal inefficiencies. Source
The advancement in Science and Technology created the first dilution for the term Bill of Materials when people started generalizing the terminology to fit their need around this fancy jargon. The best example for dilution of this term can be seen here.
With the evolution of various systems like PLM, ERP, CRM, SCM and sooner than later MOM and EAM to which every individual is going to become a slave to, and each of these systems having their own philosophy of this simple concept of Bill of Materials compounded by the fact that every department of an organization viz. Design, Manufacturing, Accounting, Purchasing, Marketing to name a few look at BoM from a totally different aspect -> This term BoM is one of the simple parameters which has been made a complex affair in today’s organizations. The confusion created by this single term has created huge mess in various organizations worldwide and the fight will go on.
Now let us get back into action with Bill of Materials.
1) What is Bill of Materials?
Let us keep it simple. I go with the age old definition of Listing of all the assemblies, subassemblies, parts, and raw materials that are needed to produce one unit of a finished product. For every product an organization makes, there can be ONE AND ONLY Bill of Material. All the other terms used such as Design/Engineering BoM, MBoM, CAD BoM etc are terms used for convenience/confusion and do not make any specific term. Now, does that mean the other data are not required? Absolutely NOT. But the point here is to ensure that these are not to be called as Bill of Materials which dilutes the original concept of BoM and creates a divide in most organizations in terms of definition of BoM which further dampens up the enterprise systems and processes in place.
Every organization will have its own process of BoM definition which should drive the other processes in making the BoM complete. A radical change is required in definition of BoM and systems approach in every organization to make BoM management a reality.
2) Where should BoM be?
A never ending and an evergreen problem. With the dilution of the definition of BoM and the arrival of complementary terms like EBoM, MBoM, Service BoM all coming into play – the simple problem of data management and relationship management has exploded into different directions with BoM bombed and data spread across various systems creating a huge mess of the data, process and systems/applications dealing with data. The primary reason for the data being everywhere is due to the fact that the definition of BoM is skewed.
3) Which is the BoM ?
Every product clearly has only one BoM – the list of objects that is put together to making of one finished product. In that case, clearly that is the BoM. This is indeed a single long list(could be a single level or multiple level list) which is based on Engineering, Manufacturing and Sourced parts and assemblies. This is the BoM. Anything that does not meet this cannot be called the Bill of Materials.
4) When BoM?
The when part of the BoM is a critical piece which I plan to divide into various pieces.
a) Create
b) Update
c) Delete
d) Change
e) Use
It is this critical part of the question that initiates various systems like ERP, PLM think in different directions. A complex list of BoMs with the varied when create, when update scenarios make BoM Management unmanageable. When you think of a single BoM concept this can make the life simple to all the users with a simplistic approach to these scenarios. Issues are multiplied due to the fact that a matrix of BoMs and scenarios have been defined with none of them leading to a single BoM strategy. A more detailed When will be available as a separate blog soon.
5) Why BoM?
A BoM is indeed necessary and the reason behind that is simple to make a collection of data of related objects that will be included for each and every product. A well defined BoM makes absolute sense to all the users of the data whilst BoM as a definition is so very loosely coupled in any organization
6) How BoM?
This is a vertical centric and organization dependent question which is the underlying technique and IP that drives the creation of a Bill of Material. This has to be unique and will differentiate a product and the process of creation of the product.
With this basic understanding of BoM, if we take a step back and look into every organization’s process, people and technology that drives the organization – very few of the organizations across the globe may have the three listed above aligned in a direction that can make them flexible yet robust. When the current enterprise systems are looked from this perspective, I hardly see any system (ERP, PLM, SCM etc) aligned to this fact and each one having a different defintion and process definition capability in their purview that can easily trouble organizations from having a seamless process and simple product definition.
This is a precursor to a series on Bill of Materials Management which I plan to create over a period of time from now on.
As always, your comments, views, recommendations, criticisms are welcome.
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[...] streams is the fact that the objective of PLM Systems continue to remain the same with managing the Bill of Materials across the product life [...]
Great Article Vishy.In fact this is the most complicated aspect of PLM where I had detailed discussions with clients. In my experience, I have seen Aerospace and Defense industry trying to maintane and manage a consolidated, single BOMs(or Design to Manufacture industry in general), however the management of BOMs becomes difficult if we move towards Configure to Order industries like HVAC (Heating Ventilation and Air Conditioning Devices) where Design office created generics and for each order the BOM differs.This becomes a nightmare for any PLM tool to manage such options and variants.
Also I have seen organizations trying to maintane department specific BOMs to make it simple and manageable. For example, Engineering departments creates their own BOMs where they dont include manufacturing parts in the BOM and leave it to be added and managed by Manufacturing/Production Department as MBOMs. I have also seen Packaging making thier own BOM by adding packaging materials to the MBOM, and also quality making their own BOMs. I agree to your view that this does makes it confusing and difficult for a tool to manage.I have also come accross a burning question : Who is the owner of the BOM? As Engineering and Manufacturing departments do have differences, the fight for ownership also leads to creation of EBOM and MBOMs. The organization where corporate governance take precedence over data governance, Single Consolidated BOMs are a new trend and I see the era of Manufacturing 2 and Hence PLM 2, moving towards managing only one, single consolidated BOM for the organizations and jointly owned by its stakeholders.
Thanks for a great insignt into this topic.
Regards
Jai
Great topic! I like the emphasizing on BOM singularity. I think, many systems confuse by mentioning of multiple Bill of Materials. My opinion is that SINGLE BOM can clarify a lot situation in the organization. However, as you mentioned it is not simple to come to this situation with multiple tools and organizational practices. There are some thoughts on this in my blog – http://plmtwine.com/2009/10/14/seven-rules-towards-single-bill-of-material/. Best, Oleg