Any business looking to seamlessly carry their manufactured products through from concept to customer is going to need an effective and accurate manufacturing Bill of Materials.
If a business goes to production with a manufacturing Bill of Materials that is inaccurate or lacking in even the slightest piece of information or instruction, it could end up with very costly delays, or even bring the entire manufacturing chain to a complete standstill.
For this reason, it is absolutely vital that business owners appreciate and understand exactly what a Bill of Materials is and how it functions.
What is a Bill of Materials?
A manufacturing Bill of Materials is essentially a meticulous set of instructions that contains a list of all the parts, items, assemblies and sub assemblies necessary to build a complete product that can be shipped to customers.
It tells all personnel involved in the procurement and manufacturing chain exactly what to purchase, how to purchase and where to purchase all the raw materials and parts required. Furthermore, it includes detailed instructions on how to assemble the product from conception through to the finished product ready for shipping – including all the packaging and instruction materials etc.
A team effort
It is not uncommon to have multiple departments — engineering, purchasing, manufacturing, outsourced contractors — working from the same Bill of Materials in order to bring the product through the production process.
For this reason, it is very important for a business to ensure that the Bill of Materials is as detailed, clearly illustrated and accurate as possible. The efficiency and cost-effectiveness of a manufactured product hinge completely on the quality of the Bill of Materials.
From purchasing raw materials and components to the assembly process on the factory floor – including tooling – during the production run, the manufacturing Bill of Materials informs and drives it all.
Optimally, a business should be able to produce its products as efficiently and cost-effectively as possible due to an accurate, revision-controlled Bill of Materials. This is why it is important to produce a BOM that is very well organised, accurate and up to date.
Little details, big losses: Why your BOM needs to be accurate
The dangers facing a business when a Bill of Materials is ineptly put together can be many and extremely costly – both in terms of time wastage, and through a needless squandering of capital and labour resources.
The manufacturing process can be hindered when you have inaccurate information. A Bill of Materials affects how much raw materials you purchase, how manufacturing will impact your stock on hand and more.
For example, the production team might run out of inventory required to build the product, resulting in a big loss in both time and money for the company as they place an order for the materials and wait for it to be delivered. Ultimately, this will impact your customers’ satisfaction levels.
An incorrect BOM can lead to a massive headache, wasted money and loss of revenue, for you and everyone on your team. If the value of parts or quantities is entered incorrectly, it could affect the efficiency of the team or the individual responsible for the product. For example, the production team might run out of inventory required to build the product, resulting in a big loss for the company.
Inventory management software can prove essential in such circumstances. Missing components in the production process can be instantly and accurately tracked and traced – down to a single bolt, washer or nail.
Further issues associated with inaccurate BOMs include:
- Inferior material planning
- Material shortages
- Inaccurate product costing
- Elevated production costs
- Delays in shipments
- Lost sales
- Increased risk of product liability as a result of a malfunctioning product
Important considerations when producing a Bill of Materials
It is vital to include everything – including consumables such as glue, wires, fasteners and other non-modeled parts like boxes and labels – that will be used to manufacture the product in the BOM.
If anything is left off the manufacturing Bill of Materials it stands to reason that it will be left out of the manufacturing process too. This means that faulty products could roll off the production line and end up in the hands of consumers, spelling financial and logistical headaches down the line.
Always keep records and supporting documents, such as CAD drawings, part data sheets and work instructions up to date and attached, with their specific BOM level components for easy reference and to ensure accuracy. Also, it is very important to be as thorough as possible with the information contained and attached to the BOM. This is because in many instances process managers will not actually meet face to face with the people assembling the product.
Lable revisions to the BOM clearly so that everyone involved is always up to speed on which is the most current version. As revisions occur the newer versions need to be easily distinguishable from previous versions. This way only the most up to date version of the BOM will be used.
The manufacturing Bill of Materials is essential to enable business to bring products from concept to customer. Businesses should take extra care to ensure that the BOM is as accurate and as detailed as possible. This is the surest way to avoid costly mistakes and ensure that product gets to market at the right quality, in the required quantity, and at the appointed time.
Article by Melanie Chan in collaboration with our team of Unleashed Software inventory and business specialists. Melanie has been writing about inventory management for the past three years. When not writing about inventory management, you can find her eating her way through Auckland.