How to Manage BoM in Your ERP System

Poor master data management is often a hindrance to using an ERP system well. Bills of Material, BOMs, are a key piece of that ERP master data. Let’s look at a BOM to understand how it can be used and managed in your ERP system.

A BOM is organized by levels and includes all the parts that are used to build your product. Level 0 is the final product sold to your customer. Level 1 might be one or more subassemblies used in level 0. There is no limit to the levels but generally you want as few as possible to keep things simple.

Within a BOM level are a list of part numbers and the quantity needed to make up the next level. Part descriptions, units of measure, procurement types, etc. are often thought of as parts of a BOM but they really are items in the part master file which is a different ERP master data item. Those values will affect how the BOM works in your ERP and they are very important.

Let’s Look at a Gizmo

A very simple BOM might be for a part called a gizmo. It is coded as an item to be sold to customers and it has a single purchased component. That purchased component is coded as a purchased item that can be stocked in inventory waiting for a sale. The gizmo has a revision level that will be used to change the BOM later when your supplier introduces an improved version of the component which will have a new part number in your inventory. Revision B of the gizmo will use the improved part in its BOM.

Many of today’s ERP systems allow the use of configurable BOMs. These will combine existing parts and subassemblies as a sales order is entered to the exact configuration your customer wants. The exact combination for this order might never be duplicated so there is no need for engineering controls to manage a one-time order configuration.

A BOM can also be used as part of your material planning system. You can create a planning BOM and master schedule that parent only to force the purchase of particular components through your forecast. Often a planning BOM will have percentage quantities per each component instead of units and the percentages will not necessarily add to 100%.

BOM is an important part of your quality and control systems. Managing BOM through your ERP system will improve inventory flow, material planning, and ultimately, strategic advantage for your business. So put the time in to learn how to manage it properly.