Bill of Materials Title Slide

Contents Definition of a bill of materials How a bill of materials is used Types of bill of materials Bill of materials information Benefits of a bill of materials Examples of bill of materials This is the outline of the entire tutorial in the order that the topics appear.

Definition Bill of materials (BOM): a listing of all of the raw materials, parts, subassemblies, and assemblies needed to produce one unit of a product. Each finished product has its own bill of materials. Product structure tree: Visual depiction of the requirements in a bill of materials, where all components are listed by levels. This definition is provided in our class text and is cited on the slide. It is not a very clear definition so the next slide explains what is means. Bozarth, Cecil C. and Handfield, Robert B. Introduction to Operations and Supply Chain Management . Pearson Education, Inc., Upper Saddle River, New Jersey, 2006. p.461.

Definition Explained Basically, a bill of material (BOM) is a complete list of the components making up an object or assembly. It is also part of material requirements planning (MRP) input. This is a simple explanation that can be understood of what a BOM actually is. MRP translates the master productions schedule into orders for actual parts. The BOM is part of this process. Next we will discuss how a BOM can be used in business.

Processes that utilize a BOM Production Materials planning Product costing Plant maintenance This is just a few of many different areas in business that use a BOM to organize their materials. This list was obtained from the following web site: http://help.sap.com/saphelp_40b/helpdata/en/cd/daf2cd4ab011d18a0f0000e816ae6e/content.htm

Types of BOMs Static (fixed) bill Example: A bill of material for a part that is normally made from the same components, labor and raw materials. Used for standard assemblies, components, and engineer-to-order customer orders. Example: A bill of materials for a standard chair A static bill of materials is a fixed bill for standard assemblies. They use the same materials and components every time. An example of this is the building of a standard chair. The BOM would be the same every time so it would be a static bill of materials.

Types of BOMs Dynamic (parametric) bill Example: A bill of material for a product or part for which size, color, laminate, and other options can be selected. Example: A bill of materials for a Dell computer A dynamic bill can vary in the components that make up a product. An example of this type of BOM is for a Dell computer. For the most part the components are standard, but the customer can choose different features and so those parts will vary from project to project.

Structure of a BOM The diagram illustrates a bill of material for product A. Product A is made of assembly B, components C and D, and material E. Assembly B is made from components F, G, and H (as well as other assemblies or products). Purchased parts are normally  identified as materials  (items E, F, and G) but can be any product, assembly or component that depending on workload you choose to buy-out or manufacture. This chart was found at the following website: http://www.feldmanengineering.com/BoM_Glossary.htm

What information is on a BOM? Quantity Item ID# Description of Item Cost of Item Total Project Cost These five items are the most typical and important items on a BOM. Some examples provided later in the presentation do not follow this exact format because there is no standard format for a BOM. Each company needs to modify where needed to fit their individual needs. To illustrate a bill of materials, we will use the project of building a basic chair.

Quantity Tells user how many of each part is needed for each project Example: A chair needs 1 seat, 4 legs, 1 back, and 5 nails. The quantity is one of the most important parts of the BOM because it tells us how many parts are needed for a project. The chair for example needs 1 seat, 4 legs, 1 back, and 5 nails to hold it together. The builder would not want to order 3 legs or forget to order the back on accident because the chair would not be finished correctly to order.

Item ID # Tells us which part to order Can be any of the following: Catalog number, UPC, or any other identification number. Example: The chair needs a 2PC seat, 5DR legs, 6TU8 back, and 1 inch nails. The item ID number tells us which type of part to buy. The numbers need to be exact for the correct part to be ordered. In our example the chair needs a specific type of seat, legs, back, and nails. The ID number can be a catalog number assigned by either the company or the vendor, or can be a type of UPC scan-able label.

Description of Item Provides a check that the correct item is being ordered. The description of the item is just a quick check to make sure all the parts were included. This way the user does not have to memorize each part by ID number. Instead, they can quickly scan the BOM and see that a seat, legs, back, and nails are included.

Cost of Item Cost is included to show how much each part is per item and the total cost of all like parts. Example: The cost of a leg is $5 per leg. Then the total price of the legs ordered would be $20 because there are 4 legs. The cost of the item lets the user know the cost per item. We can then figure out the cost for all like items. Because we only need 1 seat and 1 back, their cost for like items would be the same as the cost per item. The legs, however, have different costs because we are ordering more than one leg. In this example the legs are $5 each, so the total price of legs ordered are $20.

Total Project Cost Shows the total cost of all items and is also the total cost of the direct materials used in the project. Example: Seat-$10, Back-$5, Leg-$5 per leg, Nail-$.5 per nail Total Cost of a chair = 10 + 5 + 5*4 + .5*5 = $37.50 The total project cost may be included in some BOM to show the total cost of all the items being ordered. In our example, the total cost of the chair is $37.50.

BOM Example Quantity ID# Description Unit Price Total Cost 1 6TU8 Back $5/Unit $ 5.00 4 5DR Legs $5/Unit 20.00 1 2PC Seat $10/Unit 10.00 5 1” Nails $0.50/Unit 2.50 Total Project Cost $37.50 This is a sample BOM based on the examples provided in this tutorial

Assembly Diagram & Product Structure Tree

Example Requirements for end items generate requirements for lower-level components, which are broken down by planning periods (e.g., weeks) so that ordering, fabrication, and assembly can be scheduled for timely completion of end items while inventory is kept reasonably low.

Example 1 (Cont.) Using the information above to do the follows: a) Determine the quantities of B, C, D, E, and F needed to assemble one X.

Solution to Example 1 X a). B(2) C D(3) E E(4) E(2) F(2) Thus, one X will require B: 2 C: 1 D:6 F: 2 E: 28 (Note that E occurs in three places, with 2+2+24)

Example 1 (Cont.) Component B C D E On hand 4 10 8 60 Using the information above to do the follows: a) Determine the quantities of B, C, D, E, and F needed to assemble one X. b) Determine the quantities of B, C, D, E, and F needed to assemble ten X's, if you have the following in inventory: Component B C D E On hand 4 10 8 60

Solution to Example 1 (Cont.) Component B C D E On hand 4 10 8 60 Solution to Example 1 (Cont.) B(2) X C D(3) E E(4) E(2) F(2) b). Thus, given the amounts of on-hand inventory, 10 Xs will require B: 16 C: 0 D: 40 F: 0 E: 116 (=16+100)