BOM (Bill of Materials)
From Stock -> Items -> An item's details or Production planning -> BOM it is possible to add a bill of materials (BOM) to your products.
A Bill of Materials lays the foundation for
- material planning for production,
- planning material purchases,
- estimation of material costs when quoting.
- What is a Bill of Materials (BOM)? How is it used?
- How to add a Bill of Materials in MRPeasy?
- How to create a multi-level BOM?
- How to report scrap and wastage (Additional products)?
- How to set up the BOM with parameters?
- How to import a BOM?
- How to bulk edit BOMs?
- How is the cost of the BOM estimated?
- How is the actual cost of materials for a product calculated?
- How to update the BOM of already planned Manufacturing Orders?
- How to track changes to a Bill of Materials (revisions)?
A Bill of Materials (BOM) is a list of parts that are needed to create one finished product. In other words, it is the recipe listing all the raw materials required.
The bill of materials usually consists of several parts, and it could also include other consumables which don't make up the product (e.g. gloves, water, fasteners, etc.).
Single- and multi-level BOMs:
- A product can have a single-level assembly structure, where it is directly made from raw materials, or
- it could have multi-level sub-assemblies, where each sub-assembly has its own BOM and manufacturing instructions.
In broad terms, there are two kinds of Bills of Materials:
- The engineering BOM states discrete quantities of parts inside the product, including the detailed assembly structure of the product.
- Often does not reflect everything that is actually consumed during production.
- This kind of bill of materials is a typical output of a CAD program and is used by the engineering department as the technical specification.
- The manufacturing BOM takes into account wastage and other consumables used in production.
- The assembly structure is often simplified, if possible, to a single level.
- This kind of bill of materials is used for production planning in an MRP system, where it's necessary to know the gross number of all materials for planning purposes and inventory picking.
- The main difference? For example, while the engineering BOM states that a 1-meter stick contains 1-meter of stick, the manufacturing BOM will say that making of a 1-meter stick consumes 1.2 meters of a stick (incl. 0.2m of scrap).
For example, a Bill of Materials of a table:
|Part code||Part description||Quantity||Unit of measurement|
How is a Bill of Materials used for production planning?
- The software will multiply the materials in the BOM with the requested number of products.
- The availability of materials in checked.
- If some materials are not available, their lead times are used to calculate estimated availability dates.
For adding a Bill of Materials:
- Go to Stock -> Items -> An item's details or Production planning -> BOM
- Click on Create a BOM Add to add a BOM.
- Create separate articles for the sub-assemblies and the product.
- Add BOMs to the sub-assemblies.
- Add the sub-assembly articles to the BOM of the product.
Bill of materials revisions:
- One product can have several alternative bills of materials.
- It is possible to track changes to a BOM using the Version Control System functionality.
BOMs and Routings are associated:
- It is possible to associate a particular BOM with a particular Routing which go together.
- For production planning, a product must have both a BOM and a Routing. And both associated with each-other.
If you have a product with parameters or configurations, it is possible to utlize the Matrix BOM functionality to automatically create a number of variations.
If some part is used a fixed amount, irrelevant to the order quantity, it can be entered as Fixed Quantity on the BOM (e.g. a user manual, gloves, tools boxed with the products, etc.). To use this, the Fixed Quantity function needs to be turned on at Settings -> System settings -> Professional functions -> Fixed quantity: Yes.
If the Co-Product BOM functionality is turned on at Settings -> System settings -> Professional functions -> Co-Product BOM: Yes, then it is possible to define which additional items can be created (and reported) as a result of making the product.
This functionality is mainly for reporting scrap or wastage, which needs to be tracked in inventory for further processing.
The worker can report the quantity of the additional product during production.
The cost of the additional products is 0.
If the BOM with Parameters functionality is turned on and the item has parameters, then it's possible to define a relational BOM where
- the quantities of parts may differ according to parameter values,
- the parts may change according to parameter values.
When a BOM is saved, MRPeasy tries to estimate its cost by totaling the costs of materials used in it.
The cost cannot be estimated if:
- the cost of some raw material is unknown (no lots at stock and it neither has no vendors);
- the Matrix BOM functionality is enabled and the BOM includes a relation.
The actual cost of the product is only available after the Manufacturing Order finishes, then based on reporting, the manufacturing costs are added up, and materials have been used from particular stock lots (what is a stock lot?).
In general, a manufactured item's cost comprises of three components:
- The cost of materials.
- The manufacturing overhead cost.
- The cost of labor.
The cost of materials is calculated as follows:
- When a Manufacturing Order is created, materials are automatically booked to it (default by FIFO) from specific stock lots, based on the items BOM.
- If some materials were not available, these must be booked later to the MO.
- Each item has its own actual cost, which it was purchased with, saved in the stock lot details.
- When booked materials are reported consumed and the manufacturing order is finished, the actual cost of materials is added up and divided by the number of products.
The material cost of a product is:
- The cost of materials = Cost of consumed materials in the MO / Number of products on the order
- What is a stock lot?
- How are manufacturing overhead and labor costs calculated?
- How to schedule a Manufacturing Order?
- How to book, add or release materials from a Manufacturing Order?
If the BOM is updated and there are manufacturing orders (MO) that are based on this BOM, then the software shows a list of MOs that have not been started yet and gives an option to pick and choose which ones to update:
- Change the BOM.
- Proceed to updating BOMs.
- Choose which MOs you wish to recalculate.
- Confirm the new schedule for the MOs.
It is also possible to manually update MOs, in every status: How to book, add or release materials of a Manufacturing Order.