By Mike Wagner
A single manufacturing facility can have multiple Bills of Materials (BOMs) to produce its products. These comprehensive lists of parts, components, and assemblies also include detailed operational instructions, or routings, for compiling and assembling those materials into a completed product. A BOM not only serves as the “shopping list;” it also contains the step-by-step recipe for manufacturers.
Modern ERP systems provide many benefits as they relate to BOMs and routing and, like any good recipe, ensuring accuracy is critical to producing a desirable outcome. To achieve accurate results requires a commitment of time and resources when developing BOMs and routings. We’ll take a look at the importance of accuracy and how an ERP system can help manufacturers can improve their processes, workflows, and finished products.
Provide Real-time Capable-to-Promise (CTP) Data
When a customer places an order or calls to check on an order’s status, you need to be equipped with the right CTP information to let them know when to expect a finished good. One of the greatest contributing factors to providing this information is accurate BOM and route data. Material availability, machine output, and resource capacity all play a role in predicting when an order can be produced and delivered.
At any point in time, an ERP system can provide real-time reports to know what materials are on hand and when parts are due to arrive. This transparent data can offer a full understanding of capacity to provide CTP information to a customer.
Improved Supply Chain Management
The delivery of the right materials to the right place at the right time is at the heart of any properly implemented BOM and routing. Proper management of supply chains relies on accurate BOMs to request inventory from purchasing to ensure that no interruptions to the manufacturing process occur.
Some of these interruptions may include:
- Inaccurate representation of required materials, making it difficult to provide accurate pricing to customers
- An overstatement of consumption of raw materials, resulting in inaccurate costs
- Short inventory during production runs, delaying completion of finished goods
- Larger than normal scrap, loss, and yields, which compromise profits
When integrated with an ERP system, BOM data can automatically flow to the purchasing department so it knows what to purchase and when reducing the likelihood of running out of materials or late shipments.
Facilitation of Accurate Capacity Planning
Having the required materials on hand to produce a product is only part of the process that leads to a finished good. The routing outlines the steps and operations required to facilitate accurate capacity planning—knowing when certain resources, including plant floor machinery and tools (and the human resources required to operate them), are available. Just as importantly, routing can identify when those resources are overbooked.
As an example, Machine A may have capacity to run a particular order based on future production requirements. Accurate routing will assess capacity across the plant and may determine that Machine B also has availability and can assist in expediting the ship date, resulting in optimal use of machinery, resources, and time. An inaccurate representation of routing data may result in an overlap in machine load and a backlog increase, missed deadlines or costly overtime to compensate for lost time.
Increased Flexibility Impacts Fulfillment Costs
It’s not uncommon for there to be different versions of routes for the same product based on order quantity or resource capabilities. For example, a production order for 1,000 units may be slated to run on a primary, newer machine that has faster output. An order for 10 of those same units, however, would not warrant the interruption to that high-output machine for such a small run. A second route can be developed to accommodate for such variances. Such flexibility allows a manufacturer to provide accurate costs and ensure their production floor remains efficient and that orders are completed and shipped on time, driving up service levels and customer satisfaction.
An optional route may also involve subcontractors to accommodate timely fulfillment, add value, and allow your facility to focus on its core competencies. Using external resources requires clear expectations and communication to ensure that your CTP is not negatively impacted.
BOM and route information allows a manufacturer to analyze and identify problem areas to address operational issues and reduce excess waste based on acceptable standards and actual use. Such insights into variances provide opportunities for cost containment, substitutions, and iterative decision making during the production process.
Maintain BOM and Route Accuracy with ERP
As product designs evolve, new components are introduced, or new plant machinery is acquired, BOMs and routes will need to change with them. Determining these standards is not only useful for established processes and workflows; engineers can design various BOM and routing scenarios to determine the best outcomes. Manufacturers need to ensure there is an accurate depiction of materials, production time, inventory, labor, and overall costs to support their strategic goals.
Aligning all these data points during different product phases and iterations requires a robust ECM system that allows transparency among various departments. Taking the time to accurately reflect BOM and routes for each product is critical to ensuring product quality and profitability. To explore how an ECM can improve your processes, reach out to a Wipfli expert today.