April 8, 2022
In today’s modern manufacturing world, there are so many different activities and processes that need to happen for a product to be created. Oftentimes, it can feel like there’s just not enough time to do everything that needs to be done. And with all of the competing priorities, it can be easy to forget about one of the most important aspects of creating a product – to have an accurate representation of product structure (or Bill of Materials) with all required information. It is hard to imagine that any company can build a product without proper documentation and a Bill of Materials. Ignoring BOM is a big no-no in the manufacturing world and everyone will agree with you and ask for a BOM.
However, here is the thing… while everyone will ask you for a BOM in most cases, everyone is looking for so-called “BOM document” that will be created and presented as a comprehensive file, which is usually Excel or spreadsheet with components sorted and organized in the way it can be used by OEMs, contractors, and suppliers.
In my blog today, I want to dive into the topic of BOM importance, implementation options, and why managing BOM as a document will lead to costly mistakes and misalignment between multiple organizational groups, teams, CMs, and suppliers.
A Brief History Of BOM
Old habits die hard. While the manufacturing industry is rapidly transforming toward digital tools and connected processes, a BOM is very often considered an essential document that contains the recipe of the components for supporting the assembly and supply chain planning process.
The BOM (or Bill of Materials) is a comprehensive list of all parts, assemblies, and other materials to create a product. Sometimes it is called “product structure”. But, the list is not enough, BOM should include (or link) to other information pieces such as technical specifications, drawings, models, and requirements.
Computers systems made a huge difference in the way companies can manage data and processes. Before computers came to manufacturing, the most updated BOM was on the factory floor corkboard. It included components and manufacturing notes. However, the corkboard BOM was always far from the most updated. A lot of tribal knowledge was required to build a product from corkboard BOM and it usually was spread between multiple people and regular tasks (eg. order x boxes of fasteners every month, because we always do so).
Computers came to manufacturing already in 1950s, but later on engineers already started to work on BOMs to specify components with technical drawings. It helped to fulfill large orders with the challenges of part availability. More sophisticated approaches were developed with JIT (just-in-time) paradigm and it created MRP businesses. In the 1970s, MRP businesses became matured and it created a foundation for today’s transactional systems – put BOM in and get orders out and track purchases. It worked and works great for transactional businesses based on the BOM loaded to the MRP system.
What started to change in the 1980s and 1990s is the arrival of CAD systems. While the MRP systems are still the place to manage transactions, from the data management standpoint, CAD systems provide a way to manage and export exact information about what components are needed, how they are connected into structures, and… how to pass this information from engineering to ERP. The last one was an unfortunate event. It was a big miss from all PLM vendors that missed the opportunity to manage an information flow from engineering to material resource planning. PLM systems were focused on CAD file management and completely blew away the opportunity to manage the most important pieces of information – product structure and BOM.
As a result, BOM became a stepchild of poor PLM systems that for the most part live as a “document” (Excel) that is exported from one system to another and spent its fragmented life in mailboxes, virtual drives, and messengers.
What is Wrong with BOM Document?
The biggest problem with Excel BOMs is that the data in the Excel or Spreadsheet is completely fragmented and not connected to anything else. It is a data snapshot that becomes obsolete at the moment it is created without any ability to connect to the real data, or trace history.
Other problems with Excel are coming from the manual data handling, copy/paste, lost field, wrong versions, and disconnect between multiple people. To sum up, a company that is stuck with BOM in Excel is losing money at any moment of time Excel is a central place for BOM and product-related information.
Modern Digital BOM
The opportunity to create a full digital BOM is becoming a reality these days. The main reason for that is a new toolset of cloud technologies that allows bringing a new data management system, capable to serve multiple companies combined with global system availability, great unit economics, and seamless integrations. This is how you can move BOM that is stuck as a “document” to its digital life.
Creating digital records for your product is an essential part of digital product development. Relying on Excel and Drawing tables can give you an illusion that “work is done”, but eventually will lead to mistakes, additional costs, and delays.
How to Make a Digital Switch?
This is a question that is asked by many manufacturers in the world. Excel is simple, addicting, and costs a fortune in mistakes and future data management complications. Old mainstream PLM is limited in their data management capabilities, flexibility, and availability. Data is locked in PLM SQL repositories. Even if it gives you better data management, it still doesn’t provide a way to develop data management capabilities of big data analysis, global information traceability, connecting companies, and risk mitigations.
You need to make a first step in the digital BOM switch – stop using Excel documents and create a system of data records that can be easily created, globally accessible, and provide an intelligent track of product information, connecting dots, resources and services.
Holding BOM in the document is a strategy that leads to the data management catastrophe. Until the most expensive company asset – data is now locked in Excel, the company will continue to lose money without the ability to eliminate mistakes, deliver on time, build for cost and develop a foundation for intelligence.
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