Bills of Material, Design and New Product Introduction (Business Excellence)

How to achieve accurate and well structured bills of material (BOMs) for the most cost effective manufacturing planning in systems such as enterprise resource planning (ERP) etc.

The bill of material is probably the most used piece of information in a manufacturing company; it is also probably the least understood. The initial role of the bill of material is for the design department to define what should go into the product. The bill is then used by material planning to purchase the necessary material and components, by stores to collect together the parts needed at each stage and then by manufacturing to build the sub-assemblies and products. Frequently a quality assurance check uses the bill of material. The finance department uses the bill of material to cost the product. In most companies Sales and Marketing need to know what is in the product and be aware of any changes. There may be health and safety implications of what is in the product and what is used in its manufacture. Frequently the department that generates the information, the design department has little idea and frequently not much interest in how the information will be used once they have done their job.

A badly defined bill of material can more than double both direct and indirect costs, lead time and inventory levels of both stock and work in progress. An inaccurate bill of material will result in an increase in costs, delays, stock write-offs, product quality and data accuracy quite apart from the frustration in many parts of the company.

New products are the life blood of most companies but frequently the biggest single cause of company wide aggravation. In addition, once a product has been designed most of the product's cost has been fixed. The design and new product introduction processes are therefore absolutely crucial to the success of any company.

The good news is that well structured and accurate bills of material are not hard to achieve once everyone involve understands the information in this short and simple book.

Contents: 

Bill of material structure - manufacturing process, batch size, lead times, control, sub-contractors, stock, maintenance, design, phantoms, lead time offset, 

Bill of material accuracy - one source, costs, what to include, scrap, yield, repair bills, measurement of accuracy, 

New Product Introduction - component design, variety reduction, planning integration
Bill of material change process.

Author's biography - Phil worked for a number of manufacturing before joined Knowles Electronics as their Production Manager. Over the 10 years period whilst he was the project leader in their Business Excellence programme, Knowles had achieved class "A" in MRPII, reduced lead times from 8 weeks to next day delivery for the majority of products, reduced inventories by one third, achieved a better than 99.5% on-time delivery record and reduced customer returns to less than 300 parts per million. Absolutely critical to this was the accuracy of their restructured bills of material.
After leaving Knowles Phil worked with MRP Ltd and also set up his own consultancy BPIC to help companies also achieve Business Excellence.