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.

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What is a Bill of Materials?

In MRPeasy, a Bill of Materials (BOM) is the list of materials that are needed to create one unit of product. In other words:

for discrete manufacturing, like electronics, industrial equipment, etc., it's the list of parts;
for process manufacturing, like food, pharmaceutics, etc., it is the formula or recipe which lists the quantities of ingredients per unit of product.

When a manufacturing order is created, the BOM is multiplied by the order quantity to calculate the total material requirements.

The bill of materials usually consists of several parts, and it could also include other consumables that don't make up the product (e.g. gloves, water, fasteners, etc.).

Read more about the Bill of Materials.

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 even a routing.
If a sub-assembly does not have a routing, then it is considered as a collection of parts in a multi-level Manufacturing Order. This is also known by the terms "phantom assembly" or "phantom BOM".

For example, a Bill of Materials of a table:

Part code	Part description	Quantity	Unit of measurement
A-00001	Tabletop	1	pcs
A-00002	Table Leg	4	pcs
A-00003	Varnish	0.5	l

An "engineering BOM" is not always the same as the "manufacturing BOM" or "MRP BOM":

The engineering BOM states exact quantities of parts or ingredients 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 or MRP BOM takes into account wastage and other consumables used in production; considers the material requirements planning goals, and corresponds to the process of how the product is actually manufactured.
- Some structures and parts might even not be included. For example, when materials planning for some material is not necessary, or that level of detail, each sub-assembly planning separately, is not necessary.
- The assembly structure is often simplified, if possible, even 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 a 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, when the engineering BOM states that Part A will be used, the manufacturing BOM will say that Part A alternative will be used, because, in reality, the shop-floor uses another material.
- For example, when the engineering BOM defines each sub-assembly separately, the manufacturing BOM will not define the sub-assemblies separately, but only includes the total material requirements for making the sub-assemblies.

How is a Bill of Materials used for production scheduling?

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.

Adding Bills of Materials (BOM)

Creating a Bill of Materials

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.

Or import the Bills of Materials from a CSV file at Production planning -> BOM -> Import from CSV.

Creating a multi-level Bill of Materials

Creating a multi-level BOM for a product:

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.

Demo video

Phantom assembly, phantom Bill of Materials (phantom BOM), phantom item, kit of parts

If an item

has a BOM,
has no Routing,
and is not configured as a procured item ("This is a procured item: No"),

then it is considered as a collection (kit) of parts, a phantom BOM.

If it is included in the BOM of another part, and a Multi-level Manufacturing Order is made for that product, then:

All the parts of the kit will be included in the MO.
No operations will be required to assemble the kit.
If the kit contains other manufactured items, then operations and materials may be included to manufacture these items.

Take note that if a MO is made for such a kit item separately, to pre-assemble it, then it is treated identically to a kit (bundle) of products for selling. No multi-level MO will be made then, and it will be auto-assembled when all parts arrive in stock.

Revisions of a Bill of Materials

Bill of materials revisions:

One product can have several alternative bills of materials. During production scheduling, it is possible to choose the BOM.
It is possible to track changes to a specific BOM using the Version Control System functionality.

Connecting Bills of Materials and routings

BOMs and Routings are associated:

It is possible to associate a particular BOM with a particular Routing that goes together.
For production planning, a product must have both a BOM and a Routing. And both must be connected with each other.

Adding packaging material to a BOM

When the Enterprise function Packing is turned ON, a new section „Packing “ appears. It can be used to input packaging details for the manufactured items.

You must select an item, that is used as packaging, and a quantity of manufactured items, that can fit into the package.

Only one type of packaging can be selected for a BOM.

A fixed quantity of materials

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.

Additional products, scrap in a Bill of Materials

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 can be used for reporting scrap or wastage, which needs to be tracked in inventory for further processing.

The worker can report the quantity of additional product during production.

The cost of the additional products can be divided proportionally per unit.

Matrix BOM, products with parameters, configurations

If you have a product with parameters or configurations, it is possible to utilize the Matrix BOM functionality to create and manage a number of variations.

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.

See: Examples of BOMs with Parameters, Matrix BOM.

Estimating the cost of a BOM

When a BOM is saved, MRPeasy tries to estimate its cost by totaling the costs of materials used in it.

The cost of a BOM is estimated as follows:

If the material is in stock, the cost is approximated by using the weighted average cost of the item.
If the material is not in stock, the estimated cost of the material is used.

On the BOMs details page, the link on the "Average cost" number (Edit mode = Yes) leads to a page with an exact calculation of the item’s cost.

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 or some parameter changes the number of raw materials.

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?).

Multi-level BOM, indented BOM estimated cost

When you open the indented BOM PDF, the following should be kept in mind:

Component quantities are shown per 1 sub-assembly. I.e. the sub-assembly BOM is shown.
The cost is found for each line separately. Some items may be in stock, others not.
The cost of a sub-assembly might not equal the estimated cost of its BOM.
- If the sub-assembly is in stock, then, for it, the average cost from stock is shown. But the cost of components is found separately.

Example:

#	Part	Quantity	Average cost	Comments
1	A	1	$2.00
2	B	2	$6.00	Not in stock, the cost is estimated. = 2 x (B1 + B2) = 2 x ($1.50 + $1.50)
2.1	B1	4	$1.50
2.2	B2	4	$1.50
3	C	1	$4.00	In stock, the average cost from stock is used, which is more than its estimated materials cost would be.
3.1	C1	1	$1.00
3.2	C2	1	$1.00
Total:			$12.00	The estimated cost of the BOM = A + B + C = $2.00 + $6.00 + $4.00

Calculating the actual material cost for a product

In general, a manufactured item's cost comprises of three components:

The cost of materials.
Manufacturing overhead.
The cost of labor.

The final cost of materials is calculated when a product has been manufacturing via a Manufacturing Order:

When a Manufacturing Order is created, materials are automatically booked to it (default by FIFO; or by FEFO, for perishable goods) 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 or manufactured 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

Updating the BOM of already scheduled Manufacturing Orders

If the BOM is saved and there are current manufacturing orders (MO) that are based on this BOM, then the software asks if you wish to update MOs. It will show a list of MOs and gives options to update them.

For automatically updating the materials in existing MOs according to an updated BOM:

Change the BOM.
Save.
Proceed to update MOs.
a. Click Update all.
b. Or choose which MOs you wish to recalculate, and confirm the new schedule for these MOs.
If MO with a new BOM does not take a longer time than originally, then it is left in the schedule without any changes.

Limitations:

It is only possible to automatically update MOs which are not started yet. For other MOs, the materials must be updated manually.
It is not possible to automatically update MOs where serial numbers are reported. Serial numbers must be removed first, or the materials must be updated manually.
It is not possible to automatically update MOs where POs for subcontracted operations are created. Purchase Orders must be deleted first, or the materials must be updated manually.

It is possible to manually update the materials of MOs in every status, see: How to book, add or release materials of a Manufacturing Order.