A master bill of material defines the components required to produce a manufactured item. It may optionally have one or more bill versions. The master bill (and bill version if applicable ) provides the initial basis for components in an order-dependent bill. The following sections review the creation and use of master bills and the component information.
The identifier for a master bill of material (termed production BOM number ) can be automatically or manually assigned. When a manufacturer employs a unique bill for each item, manual assignment can be used to match the identifier to the applicable parent item number or the item s drawing number. Most users find the significant identifier easier to use than an auto-assigned identifier. After defining a master bill and its components, the master bill identifier must be assigned to the relevant item number(s).
A master bill has a separate status that affects bill maintenance and usability. The certified status indicates the master bill has been completely defined, prevents maintenance of component information, and enables the bill to be used for costing and planning purposes. A status of new, under development, or closed allows maintenance of component information, but prevents cost roll-up and planning calculations as well as creation of a production order.
Each master bill must have a specified UM so that component-required quantities reflect the quantity per unit. This requirement for a specified UM stems from how a master bill decouples the relationship between a parent item and its bill components. Most manufacturing environments use a specified UM that matches the base UM for the parent item. The specified UM supports those environments requiring production in a different UM or bills that vary by lot size .
A component in a master bill is termed a BOM line . Information for each component includes the component type, component item, required quantity, planned scrap percentage, find number, routing link code, and effectivity dates.
Component Type and Component Item The component type indicates whether the component is a normal item (defined by an item number) or a phantom (defined by a master bill identifier). This approach to phantoms means that an item number is not required for a phantom, although some firms define an item to indicate attributes (such as drawing number) or handle sales of the phantom. This phantom approach also means that blow-though logic only applies to material components and ignores a phantom s inventory. A blank component type can be used to indicate comments in the component description field.
Component Required Quantity A component s required quantity reflects the amount needed to build one parent item, using the master bill s specified UM. This quantity per can be entered as a fraction or decimal, with a limit of five decimal places. The component s required quantity normally reflects its base UM, but a different UM can be specified for the component. The component s UM provides one approach to handling more than five decimal places in a required quantity, such as expressing .123456 kilograms as 123.456 grams.
A special case of component required quantity involves a calculation formula based on quantity per and dimensions such as length, width, depth, or weight. With cut-to-size material, for example, a component requirement for steel rod could be specified as three pieces of two- foot lengths, resulting in a total requirement of six feet. This approach avoids the need for creating different item numbers for unique sizes and provides the basis for communicating cut-to-size instructions to production.
A negative quantity for a bill component represents a by-product component. Cost roll-up calculations subtract the cost for a by-product component. Planning calculations recognize the scheduled receipt for a by-product component. The order-dependent bill for a production order includes the by-product component, and a by-product component can be manually added to the order-dependent bill. A by-product component in the order-dependent bill can be received into inventory from the production order (via the Consumption Journal window used to issue other components). Differences between standard and actual by-product receipts are treated as a material variance.
Planned Scrap Percentage A component s planned scrap percentage indicates that normal manufacturing practices result in scrapped components. Other approaches can be used to identify planned scrap as described in the following breakout box.
Planned manufacturing scrap can be expressed with several different approaches. A planned scrap percentage for an individual bill component will increase its requirements on an order-dependent bill and in planning calculations. A planned scrap percentage for a parent item will increase requirements for all of its components and operations. The planned scrap percentage and fixed scrap quantity for an individual routing operation will increase requirements for its total operation time and for related material components, and have an additive effect on previous operations in a multistep routing. Each scrap approach will also be considered in cost roll-up calculations for parent items.
Routing Link Code A routing link code assigned to a routing operation can also be assigned to relevant components in the bill. This ensures that material due dates reflect the operation start date, material requirements reflect the operation scrap factors, and auto- deduction of material components can be tied to unit completions reported for the operation. The routing link code is optional.
Production Lead-Time A component may be required a number of days prior to (or after) the production order start date, or the operation start date when the material is linked to the operation. A positive production lead-time indicates a requirement before the start date, whereas a negative value indicates a requirement after the start date.
Effectivity Dates A component s starting and ending dates indicate planned changes to a bill of material. Phasing out an existing component on date X and phasing in a new component on date X+1, for example, would indicate a planned replacement. These component effectivity dates are used in planning calculations, cost roll-up calculations, and creation of an order-dependent bill.
Bill-Related Text Comments can be entered for a component or for the master bill. Text can also be entered as a separate component line using a component type of blank.
Position Information for a Material Component Position information provides reference data that can serve different purposes. Some manufacturers employ a position number to represent a sequential counter of components, often tied to the find number on drawings. Some firms use the position field(s) to identify a grouping of components, such as the material needed for an operation (when routing data isn t used), the delivery area for a group of picked components, or a group representing related parts in the production process. A few firms use the position fields to identify the in-revision and out-revision of each component. The position fields provide one approach for handling reference designators.
A master bill can optionally have additional versions, where each version has a unique identifier termed a version number . Some manufacturing environments employ versions of a bill to manage planned engineering changes, to define authorized recipes, or to serve some other purpose. Each bill version requires the same information as a master bill, such as status and specified UM, and the same component information. Each version defines a unique bill of material and multiple versions can exist, each with a certified status. The desired version of a bill can be manually specified on a production order.
Each version also has a starting date field. The starting date is optional and provides one approach to planned engineering changes. Each version s starting date determines when it becomes active, and bill versions supercede each other automatically. Bill versions can be compared. The active bill version acts as the default on production orders, but it can be manually overridden.
Components in a master bill can be manually entered or automatically created by copying components from another master bill. After using the copy bill function, the system incrementally adds the new components to the existing components. The copy bill function can be used multiple times to generate incremental additions. The components can then be manually maintained .
Components in a version of the master bill can also be created via copying. Components can be copied from the master bill or another version of the master bill. After using the copy function, the system deletes existing components and adds the new components. The copy bill approach for bill versions does not support incremental additions.
An order-dependent bill (termed production order components ) refers to the bill of material attached to a production order. Changes to an order-dependent bill do not affect the master bill. Creation and maintenance of an order-dependent bill reflects several rules. These rules include:
The refresh process for a production order can delete the existing order-dependent bill and replace it with a new one.
When an order-dependent bill is initially created, it reflects the bill version (if applicable) and components in effect as of the production order due date. The user can optionally override the master bill and/or the bill version on a production order prior to creating the order-dependent bill.
The order-dependent bill contains components of a phantom.
The user can modify the components in an order-dependent bill to indicate material substitutions, additions, deletions, and quantity changes. A component s flushing method can be changed.
An order-dependent bill can be created for a firm planned and released production order as well as a simulated production order. It can also be created for a planned production order, but planned orders get automatically deleted by planning calculations.
A released production order cannot be refreshed after reporting material or capacity usage against the order.
An order-dependent bill applies to each line in a multiline production order.
A material item can be issued to a released production order even when the component does not exist on the order-dependent bill; it does not get added to the order-dependent bill.
Component usage can be manually reported or auto-deducted for a production order. Many manufacturers prefer manual reporting because it provides a method for inventory control, they have lot- or serial-controlled components, or they perceive auto-deduction as too complex. The manual reporting approach requires more transaction processing, but automated data collection can minimize this impact.
Auto-deduction reflects the component quantity defined in the order-dependent bill. Auto-deduction logic can be forward or backward and considers whether a component is linked to an operation via a routing link code.
For non-linked components, changing a production order s status to released triggers forward flushing while changing status to finished triggers backward flushing. Forward deduction reflects the production order quantity (also termed the theoretical output quantity) while backward flushing reflects the actual output quantity reported.
For a linked component, starting the operation triggers forward deduction while reporting unit completion triggers backward deduction. Forward deduction reflects the theoretical units for the operation while backward flushing reflects the actual output units for the operation.
Auto-deduction of a component s inventory requires information about where it is located. The order-dependent bill identifies the location and bin that will be used for auto-deducting a component. The component s location normally reflects the manufacturing location specified for the production order; the component s bin reflects its default bin within the location. This means each component item must have inventory in its default bin for auto-deduction purposes.
Manual reporting can be used to identify additional material usage after a component has been auto-deducted. An auto-deduction approach requires accurate bills, and accurate routing data about linking codes, to be effective.
The method for reporting a component s usage is termed a flushing method and is defined on the item master. The SKU s flushing method acts as the default when the item is a component on an order-dependent bill. The flushing method can be overridden at this point.
Operations can be performed at a machine or work center, and these represent company-wide information. Machines can be grouped into work centers for the purpose of calculating consolidated capacity. As a general guideline, either machines or work centers should be used when defining routing operations. This approach avoids unnecessary confusion in specifying costs and available capacity, and recognizes the limitations about automatically scheduling operations on machines within a work center. Further explanations focus on using work centers.
A work center may represent an internal resource or an external subcontractor. Both types of work centers have a physical identity and operate under capacity constraints, expressed in hours of operation (such as 7 a.m. to 4 p.m.). Internal and external work centers can be conceptualized similarly, but differ significantly in terms of costing, time requirements, and scheduling logic.
Information about an internal work center includes the identifier, the assignment to a work center group, the work center s UM, available capacity, and costs. The scheduling of production orders in a work center normally reflects an infinite loading viewpoint, but a finite loading viewpoint applies to work centers designated as capacity constrained
Work Center Identification A work center number uniquely identifies each internal and external work center. The identification of internal work centers generally reflects the layout of a manufacturing plant, such as identifying a manufacturing cell , groups of similar machines, or groups of people with similar skills. Additional considerations may include the amount of detail needed for defining process specifications, the similarity of costing data, and the need for capacity planning and separate production schedules. These considerations must be balanced against the amount of effort to define and maintain routing data.
In a multisite operation, the exact same piece of equipment (or manufacturing-cell) in two locations must be defined by two different work center identifiers.
Work Center Group A work center group typically represents a department and one group is assigned to each work center. The cumulative load and available capacity can be viewed for each work center group, thereby supporting aggregate capacity planning across multiple work centers.
In a multisite operation, the work center group can represent similar equipment in multiple locations, so that aggregate capacity planning supports centralized master scheduling. In this way, production could be shifted between locations to avoid an overloaded work center.
Work Center Capacity and UM Work center capacity and costs are expressed in a time-based unit of measure, such as hours, minutes, or days. Most firms use hours for all work centers, or at least a consistent UM for all work centers within a work center group. The work center s UM acts as a default for expressing time requirements in routing operations performed at the work center. However, an operation s time requirements can be expressed in a different UM such as minutes.
A work center s available capacity reflects its hours of operation and the average number of machines (or people) that can be working during these hours. The number of machines (or people) is termed the capacity of the work center. A manufacturing cell or an assembly line typically has a capacity of one regardless of how many people or machines are involved in its operation.
The assigned shop calendar defines the hours of operation for a work center.-Each shop calendar defines a repeating pattern of working days and working hours per day, with optional holiday exceptions expressed in terms of specific dates. The available capacity can be adjusted by an efficiency percentage assigned to the work center. A separate function calculates a work center s available hours over a user-defined time horizon, where the calculations reflect the assigned shop calendar, holidays, efficiency percentage, and the average number of machines (or people).
Work Center Costs and UM A work center s costs are expressed per its UM, such as costs per hour of operation. A work center s costs consist of a direct unit cost and overhead cost, where overhead costs can be expressed using an amount or a percentage (of direct unit cost) or both. The direct unit cost and overhead cost comprise two cost elements termed capacity cost and capacity overhead cost. The system uses these two cost elements in cost roll-up calculations and for charging time reported at the work center. These two cost elements also provide the basis for calculating production order variances related to capacity and capacity overhead.
Infinite vs. Finite Loading Viewpoints A work center is normally treated as having infinite capacity for scheduling purposes, such as calculating an operation s elapsed time and a production order s lead-time. Scheduling logic ignores current loads, which means an unlimited number of orders can be scheduled concurrently at a work center for each operation s duration. An analysis of work center load versus capacity can be used to identify overloaded periods, so that manual adjustments can be made to loads or available capacity.
A work center can optionally be designated as a finite or a capacity constrained resource . Scheduling logic considers current loads, which means a single order can be scheduled at the work center for the operation s duration. Scheduling logic considers two additional factors when loading a capacity constrained resource: a load percentage (relative to available capacity) that limits the amount loaded and a tolerance percentage that allows overloading. A firm s bottleneck work centers are typically identified as a capacity constrained resource.
An external work center represents a single vendor performing an outside operation on supplied material. Each outside operation in a routing specifies an external work center that has a designated vendor. Definition of an external work center is similar to an internal work center, with several major exceptions.
An external work center has a designated vendor as the subcontractor. The designated vendor acts as a default for suggested purchases for outside operations.
Costs are specified for each routing operation performed by an external work center, typically expressed per unit. This unit cost represents a subcontract cost element in cost roll-up calculations, and acts as a default purchase price on suggested purchases.
The external work center is assigned a shop calendar that reflects the vendor s hours of operation. Scheduling logic uses this shop calendar, along with the time requirements for an outside operation, to schedule the turnaround time at the subcontractor.
A work center s statistics summarize available capacity, actual reported time, and a capacity utilization percentage for the current accounting period, current year to date, and the preceding year. A work center s load window summarizes available capacity, expected load, and a capacity utilization percentage for various time increments , such as months and weeks. It also provides drill down to the production orders causing the expected load.
A master routing defines the operations required to produce a manufactured item. It may optionally have one or more routing versions. The master routing (and routing version if applicable) provides the initial basis for operations in an order-dependent routing. The following sections review the creation and use of master routings and the information about internal and external operations.
The identifier for a master routing (termed a routing number ) can be automatically or manually assigned. When a manufacturer employs a unique routing for each item, manual assignment can be used to match the identifier to the applicable parent item. Some manufacturers employ a common routing for producing different items; the common routing approach reduces routing maintenance efforts. After defining a master routing and its operations, the master routing identifier must be assigned to the relevant item number(s).
A master routing has a separate status that affects routing maintenance and usability. The certified status indicates the master routing has been completely defined, prevents maintenance of routing operations, and enables the routing to be used for costing and scheduling purposes. A status of new, under development, or closed allows maintenance of component information, but prevents cost roll-up and planning calculations as well as creation of a production order.
A master routing does not have a specified UM, unlike a master bill. The run times for each operation represent the quantity per parent item for an implied unit of measure.
Each master routing has a routing type ”serial versus parallel ”indicating how operation sequences should be treated for scheduling purposes.
Scheduling logic is based on operation sequence numbers in a serial routing. In a routing with one or more parallel operations, scheduling logic must be based on user-specified values for the previous and/or next operation sequence number assigned to each operation.
Information about each internal operation (termed a routing detail line ) includes the operation sequence number, time requirements, scrap factors, routing link code, and other information. Most companies will use either work centers or machines in their routing data; we will simplify the explanation by focusing on work centers.
Operation Sequence Number The operation sequence number provides a unique identifier for each operation within a routing, and provides the basis for scheduling a serial routing. For a parallel routing, scheduling logic requires additional information about the operation sequence numbers for previous and/or next operations. A routing containing several serial operations and only one parallel operation is still considered a parallel routing.
Time Requirements Time requirements for an operation typically consist of run time per unit and optional setup time. Time can be expressed in an operation-specific UM, including a run rate such as 100 units per hour. Cost calculations are based on run time and setup time, although setup time can be optionally excluded.
Other time requirements may be specified for scheduling purposes. A wait time represents a drying or cooling period after completing an operation, while move time represents the time an item spends in transit from one operation to another. Scheduling logic uses the setup, run, wait, and move time plus the queue time for each relevant work center to calculate lead-time for a production order.
Scrap Factors Operation scrap can be expressed as a variable ( percentage) or a fixed amount or both. The operation scrap factors have a cumulative effect in a multistep routing.
Routing Link Code A routing link code assigned to a routing operation can also be assigned to relevant components in the bill. This ensures that material due dates reflect the operation start date, material requirements reflect the operation scrap factors, and auto-deduction of material components can be tied to unit completions reported for the operation. The user-defined link codes often correspond to work centers where material usage occurs.
Other Scheduling Information Other scheduling information includes a send-ahead quantity and a concurrent processing quantity. A send-ahead quantity models overlapping operations, where the next operation can be started after production of the send-ahead quantity. A concurrent processing quantity indicates that multiple machines or people can work on the operation to reduce the elapsed run time. Scheduling information for a parallel routing also includes the operation sequence numbers for the previous and/or next operations.
Other Descriptive Information Descriptive information about an operation includes comments, tools, and quality measures. Descriptive information can also be predefined as a standard task code, and then reused in routing operations.
Information about each outside operation differs slightly from an internal operation. The primary differences involve the work center, the unit cost per item, and time requirements.
Work Center. The specified external work center has an associated vendor. Costs are not typically specified for an external work center, and a costing policy (termed specific unit cost ) indicates that costs are specified at the operation level in terms of a cost per unit.
Unit Cost per Item. The specified unit cost per item reflects the purchase price of the outside operation and a subcontract cost element.
Time Requirements. Time requirements for the external work center typically consist of a move time to indicate the elapsed turnaround time for the outside operation. The appropriate value depends on how available capacity is defined in the work center s shop calendar. For example, a three-day turnaround time could be expressed as 24 hours move time when the work center s shop calendar contains 8 hours per day.
An outside operation involves two streams of supply chain activities ”for the production order operation and its related purchase order ”that require coordination. Creating a released production order results in an order-dependent routing with the outside operation, and a suggested purchase can be identified for the outside operation. The suggested purchase identifies the relevant production order and operation sequence, along with a suggested purchase price, vendor, quantity, and turnaround time.
There are two different approaches regarding component material for an outside operation: the component material can be issued as a kit or stocked at the vendor. The selected approach impacts how to model material consumption.
Issuing Components as a Kit. The supplied material is issued against the production order and the completed items are received against the purchase order.
Stocking Components at the Vendor . The consumption of component material still needs to be reported against the production order ( typically through backward flushing), and the completed items are received against the purchase order.
In either case, actual costs are passed directly to the production order s operation upon purchase order receipt. When the outside operation is the last operation in the routing, the output must be reported to receive the completed parent item into inventory. Otherwise, the reporting of operation time and/or unit completions against the production order is not typically required for an outside operation.
A master routing can optionally have additional versions, where each version has a unique identifier termed a version number . Each routing version requires the same information as a master routing, such as status and routing type, and the same operation information. Each version defines a unique routing and multiple versions can exist, each with a certified status. The desired version of a routing can be manually specified on a production order.
Each version also has an optional starting date field that supports planned engineering changes. Each version s starting date determines when it becomes active, and the system automatically recognizes superceding routing versions and the active version. The active routing version acts as the default on production orders, but it can be manually overridden.
An order-dependent routing (termed a production order routing ) refers to the routing operations attached to a production order. Changes to an order-dependent routing do not affect the master routing, and typically reflect an alternate operation. The previously described rules for creation and maintenance of an order-dependent bill also apply to an order-dependent routing. However, time can only be reported when the operation sequence exists in the order-dependent bill.
An operation in the order-dependent routing can be flagged for manual scheduling, thereby preventing automatic calculation of production lead time based on routing data.
Actual work center time expended on a routing operation can be manually reported or auto-deducted. Manually reported time reflects the operation s unit of measure such as minutes or hours, and can be recorded along with unit completions for the operation.
Auto-deduction reflects the operation time defined in the order-dependent routing. Auto-deduction logic can be forward or backward, representing auto-deduction at the start or finish of a production order. Changing a production order s status to released triggers forward flushing while changing status to finished triggers backward flushing. Forward flushing reflects the production order quantity while backward flushing reflects the actual output reported. Manual reporting can be used to identify additional time expended after an operation s time has been auto-deducted.
The method for reporting time at a work center (termed a flushing method ) is defined on the work center master. This flushing method acts as the default for an operation component on an order-dependent routing, where it can be overridden.