The primary objective with which any process manufacturing business operates is smoothly carrying its manufactured products through from the conception phase, production phase, to the customer. In executing this process seamlessly, it requires an effective and accurate Bill of Materials (BOM), an integral component of the manufacturing process that binds together all the concerned departments and serves as the blueprint on how a product should be put together. Being an essential part of the manufacturing process for the process manufacturing industries, BOM is used to link the formula with the finished goods or the intermediates stored in the inventory.
The importance of Bill of Materials can be understood in a better way from the fact that if the business goes to production with even a slightly inaccurate BOM that lacks any information or instruction, its consequences can range from wrong product manufactured or a completely dissatisfied customer. Hence, it is of utmost importance for the businesses to understand what Bill of Materials is and how it works, to ensure timely and efficient production of goods, as well as overall business efficiency and profitability.
What is Bill of Materials?
Wikipedia defines a Bill of Materials as a list of the raw materials, sub-assemblies, intermediate assemblies, sub-components, parts, and the quantities of each needed to manufacture an end product. A BOM may be used for communication between manufacturing partners or confined to a single manufacturing plant. It is often tied to a production order whose issuance may generate reservations for components in the bill of materials that are in stock and requisitions for components that are not in stock.
In simple words, a Bill of Materials is required to define how an item is manufactured from top to bottom. It is a structured list of all the components that make up a product or assembly. The list comprises of the material number of each component, together with the quantity and unit of measure. Also the components can be raw materials, semi-finished products, or ingredients. BOM can be single level and multi-level. For example, finished material would contain semi-finished materials as components, which in turn would contain raw materials as components in next level.
BOM also includes detailed instructions on how to assemble the product right from conception through to the finished product ready for shipping – including all the packaging and instructions, etc.
A well-defined BOM helps companies with:
- Planning for purchases of raw materials
- Estimation of the material costs
- Complete inventory control
- Tracking and planning material requirements
- Maintaining accurate records
- Waste reduction
Talking particularly about the process manufacturing industry, the packaging of finished goods is often done keeping the convenience and the requirements of the end consumer in mind. These options may range from a small 200 ml bottle to bulk containers for mass consumption. In this case, with the help of BOM, you can associate formula, labor, overheads as well as packaging materials with the finished good to govern the production process.
Companies normally have a large number of BOMs defined for their different products. And, with the growing demand of multiple packaging by the consumers these days, this number is just multiplying. Normally companies have one BOM per product, so greater the number of packaging available for a product, greater would be the number of BOMs. Managing such a large number of BOMs, their revisions and tracking of their versions can be chaotic and stressful. Process manufacturing ERPs today are built to handle complex multi-level BOMs with complete ease. From defining n number of BOMs, managing their revisions, tracking their numerous versions, reverting to prior versions, evaluating their costs, etc., an ERP solution’s BOM module can do all.
Mentioned below are some features of BOM module of a Manufacturing ERP:
- Allows one formula to be associated with multiple BOMs
- Defines intermediate and Finished BOMs
- Flexibility to define Fill Level in desired unit of measurement
- Serves multiple packaging options
- Separately evaluates formula and packaging costs along with labor and overheads too
- Provides drill down and BOM where-used information
- Different BOM types like Fill, Assembly, Container BOMs, etc. to meet different packaging needs
- BOM report to classify the top assembly items, assembly types, and status of the BOM components associated with the formulas
- Cater your needs for both Process (Formula BOM) and Discrete (Assembly BOM) Manufacturing
- Dispatches full view of the BOM hierarchy
- Single BOM allocation with multiple formulas
For the process manufacturing industries, one specialized manufacturing ERP which comes with a comprehensive BOM functionality is BatchMaster ERP. If you would like more information on this subject, including BatchMaster Manufacturing ERP, or have questions about identifying an ERP solution for your process manufacturing business, please contact us. For more information on our different ERP offerings, visit www.batchmaster.co.in.