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The Importance of Bill of Materials in Manufacturing

30 Sep, 2021 | Business Tips

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Any business that wants to carry their manufactured products from concept to the customer seamlessly always starts with an accurate manufacturing Bill of materials (BoM).

Suppose a business goes to production with a BoM that is inaccurate or lacking important information or instructions. The production job could end up with costly delays or bring the entire manufacturing chain to a standstill. 

What is a Manufacturing Bill of Materials?

A manufacturing Bill of Materials is a meticulous set of instructions containing a list of all the items, parts, assemblies and sub-assemblies necessary to develop a complete product that you can ship to customers.

A complete BoM informs all the personnel involved in the procurement and manufacturing chain about what, how and where to purchase all the necessary parts and raw materials.

Plus, it includes detailed assembly instructions from conception through to the finished product that is ready to ship – including the packaging and instruction materials.

Why Your BoM Must be Accurate

A poorly written Bill of Materials can be very costly to your business – both in terms of time wastage and squandering of capital and labor resources.

Manufacturing Delays

The manufacturing process is hindered by inaccurate production information. A Bill of Materials will impact  the amount of raw materials you purchase, and the volume of stock on hand and more.

For instance, the production team could run out of inventory required to build the product. It may result in a significant loss of time and money for your business as it orders your materials and waits for delivery. Ultimately delays impact your customer satisfaction levels.

An incorrect BoM may lead to loss of revenue and wasted time and money. If you enter the value of parts or quantities incorrectly, it can affect the efficiency of your team or the individual responsible for the product. 

For instance, the production team might run out of inventory required to build the product, resulting in a significant loss to the company.

Robust inventory management software proves to be essential in such circumstances. You can instantly and accurately track and trace the missing components in the production process down to a single bolt, washer or nail.

Other issues associated with inaccurate BoMs include:

  • Inferior material planning
  • Inaccurate product costing
  • Material shortages
  • Elevated production costs
  • Shipping delays 
  • Increased risk of product liability 
  • Lost sales

Read about: Bill of Materials – All You Need to Know 

Importance of Bill of Materials in Manufacturing

Here are a few reasons why a Bill of Materials is critical to the manufacturing process and how you can benefit.

Customized Shopping List

You can often refer to the Bill of Materials as ‘recipes’ or ‘shopping lists,’ as they detail all the raw materials and quantities required. An accurate BoMt simplifies the procurement of components. You can scale production jobs up or down as per budgets.

Never Run out of Materials

Organized material requirements planning, inventories and accurate quantities ensure that you never run out of materials again. BoM and a robust inventory software solution that includes a manufacturing module helps you to set reminders when stock is running low. Some inventory software will even auto generate a PO to a supplier when component levels drop to a specified quantity.

Better Planning

BoM provides you with a comprehensive list of what is needed to complete a project. It provides you with all the data required to map out how long a project will take and the number of people involved.

Better Costing

Better planning provides your business with more accurate knowledge about how much time a task may take. It allows your sales team to cost up jobs and orders more efficiently and provides an accurate view of COGs increasing your control over profit margins for your company. It’s always advisable to include some of the sales team in the BoM creation. An inventory management solution allows multiple teams across the company to review and approve production job details.

Unites all Departments

The right inventory software solution ensures that all departments work as one. While creating a BoM, you must have input from design, manufacturing, procurement and sales team to ensure that the document is accurate.

Important Tips for Producing a Bill of Materials

It’s essential to include consumables like glue, fasteners, wires and other non-modelled parts like boxes and labels. They may be used to manufacture the BoM product.

If there is anything left off the manufacturing Bill of Materials, it may be left out of the manufacturing process. So, faulty products could roll off the production line and end up in customers’ hands causing logistical and financial headaches down the line.

You must always keep records and supporting documents like CAD drawings, work instructions and part data sheets up to date and attached. Their specific BoM level components provide easy reference and ensure accuracy. 

You must be as thorough as possible with the information contained in and attached to the BoM. That’s because process managers often do not meet face to face with the people assembling the product.  

Always label the revisions to the BoM accurately so that everyone involved is always up to speed and referring to the most recent version. As the revisions go on, the newer versions must be easily distinguished from the previous ones. 

The manufacturing BoM is essential to enable your business to bring products from concept to customer. Businesses must take extra care to ensure that the BoM is as detailed and as accurate as possible. 

Follow our tips to avoid costly mistakes and ensure that your product gets to market with the right quality, required quantity and at the appointed time.

Read more: Dear Advanced Manufacturing Module Launches

Dear Systems is an Expert at Managing Bill of Materials for Manufacturing

BoM is a critical part of any manufacturing process turning product designs into a reality. 

DEAR Systems inventory management software provides you with a comprehensive Bill of Materials functionality. DEAR is the best bet to develop an effective Bill of Materials.  And its features ensure that your teams work with the most current information. 

DEAR Systems offers one of the most advanced and affordable inventory management systems on the market. DEARhelps you create advanced BoM and define manufacturing processes for single or multiple production jobs simultaneously. DEAR also enables you to implement parallel and non-parallel operations in a production BoM and track Cost of Goods sold to the penny.

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