Manufacturing - Bills of Material Overview

The key to a successful manufacturing software implementation begins with the Bills of Material module. A bill of material (BOM) defines product structure both in terms of materials and plant resources such as machinery, tooling, and labor. The Bills of Material module provides a solid base for production activity to be defined, tracked, and reviewed.

The Bills of Material module allows you to create and maintain BOMs. Among the many features of this module is the ability to make high-level material availability inquiries, print generic BOM worksheets, manage standard cost updates, track changes to BOMs, and globally replace BOM components.

In addition to the standard functions found in most bills of material software, the Bills of Material module enables you to import foreign ASCII data directly into the BOM from other software applications such as CAD systems.

A properly designed and accurate BOM is one of the main elements in successful manufacturing implementation. The Bills of Material module is crucial to the productivity and reliability of the Production module that handles production activities, and focuses on the use and planning of materials and shop capacity.

Frequently used functions

The most frequently used functions are on the Setup and Maintenance and Reports menus. Use these functions for the following tasks:

  • Enter and edit Bills of Material and Engineering Change Orders.
  • Print the Costed Bills of Material and Component Where - Used Report.

Setup and Maintenance functions

The setup and maintenance functions will be used to set up information to be used in your BOMs and also setting up your BOMs. The setup and maintenance menu contains these functions:

  • Bills of Material
  • Engineering Change Orders
  • Cost Groups
  • Media Groups
  • Engineering Change Order Codes
  • Global Component Replacement

Interfaces

Bill of Materials can interface with General Ledger and requires Inventory, therefore it is automatically interfaced to Inventory.

Bills of Material includes inquiry functions, reports, and lists that provide you with the manufacturing information you need to analyze your business practices. To make the most of your manufacturing processes, use the functions described below.

Cost Groups

The Cost Groups function allows you to view the current definitions of each of the cost groups.

Media Groups

Use the Media Groups function to view visual objects such as schematics, drawings, instructions, visual images, or movies grouped together into a user-defined media group, which can then be assigned to specific BOMs, operations, routing steps, and so on.

Routing and Resources

If the Routing and Resources module is installed, you may set up the following items next (see Routing and Resources topics for more information.):

  • Tooling – Set up and define Tooling maintenance, method of usage, cost, and so on. Proper Tooling for each Operation appears on relevant reports and inquiries to help you properly set up the Operation.
  • Labor Types – Labor Types define the skill or grade that can be defined and applied to specific processes. Associated with the Labor Type is a rate by piece or hourly rate. Labor Types are later assigned to operations to calculate the labor costs involved.
  • Machine Groups – Define your machine groups. These groups can be a single machine or an entire bank of machines. If your machinery, although similar in name, is unique enough that its cost factors differ significantly from machine to machine, you may want to define each machine with its own machine group ID. If the materials vary from machine to machine, you may also want to define each machine with its own machine group ID. The grouping of these machines is usually done by their basic function and cost factors. Like labor, machine groups can be assigned a schedule, hourly costs, and so on. Machine groups are assigned to operations in order to establish a machine related cost.
  • Work Centers – Work Centers define where work is to take place and provide an area to set up overhead account IDs for GL, overhead rates, and methodology. Work centers play an important part in managing labor and machine resources. They are later assigned to operations to indicate where the work takes place or what the overhead factors should be for that operation.
  • Operations – Define your operations. Operations pull the tooling, machine group, labor type, and work center information together in a defined operation process. You can also use this function to set up a subcontracted operation. Drilling, painting, mixing, and packaging all describe typical internal operations. If the operation is internal, you can define the various related times involved in manufacturing. The setup of queue time, setup time, run time, wait time, and move time can be defined in terms of hours, minutes, and seconds.
  • Routings – are defined as the general flow of an assembly through the plant floor. They are made up of steps that define the operation being performed at that step. Routings are used when you set up the BOM. Having standard routings makes the creation of a routing for a BOM much easier and quicker. However, you do not need to create any preset routings to use or maintain the Bills of Material module. If you choose not to set up these standard routings, create the routing steps individually when you set up of the BOM.

Reports

The Bills of Material reports offer you more detailed information that can’t normally be accessed using an Inquiry or Setup and Maintenance function. The option to output to a file or printer also enables you to save the information to review later. Many reports offer a variety of selection criteria and sort parameters for formatting the report to meet your needs.

  • Costed Bills of Material: Use the Costed Bills of Material report to view what costs make up a BOM and where these costs come from. A BOM consists of four main elements: materials, by-products (materials created as a result of the manufacturing process and have some value), subcontracting, and operations.

    NOTE: Subcontracted steps are actually routing steps and are listed as such in the report.

  • Component Where Used: The Component Where Used report enables you to select a range of inventory items and view where those items are used in BOMs. Use the Single Indention option to view a simple list by component of each BOM in which the component can be found. Use the Fully Indented option to view a fully indented BOM. By looking at a fully indented Component Where-Used report, you can determine the overall effect of a problem with a low level component starting from the bottom and working your way up.
  • Available Components: If you want to build a specific quantity of a given item, but it’s an assembly with many components, and you can’t easily calculate how many you can build without knowing the quantities available at the subcomponent levels, use the Available Components report. This report calculates the required quantity of each of the components involved from the top level to the bottom (or stocked assembly level) and shows the operator, the component availability at each level, indicates the quantity required that is available, and the net over or under.
  • Indented Bills of Material: The Indented Bills of Material report displays material information in an indented format so that each subassembly’s components are indented beneath it. This indention gives you a better look at BOM structure from the top down, including subassembly information. The report drills down into a BOM until a raw material or stocked subassembly is found. Stocked subassemblies are assemblies whose Stocking Level check box is selected on the General tab of the Bills of Material screen within Setup and Maintenance. This check box indicates that it is a stocked item and production orders that include this subassembly create direct demand for this item, but not for its components. An override option exists on the Indented Bills of Material screen to ignore this flag and drill down on all BOMs to their lowest component level.
  • Summarized Bills of Material: The Summarized Bills of Material report summarizes components by cost group. Information is not indented, but grouped from the top-level BOM down. Use the Summarized Bill of Material report to quickly see what material components, machinery, labor, and work centers are used for the entire BOM without searching through a lot of additional information. For example, if you print a summarized BOM for a complete automobile, you should be able to see every machine used in the entire process in one grouped summary area, if every machine has the same cost group or type.
  • Bill of Material Worksheets: The Bill of Material Worksheets is a working form and can be used in place of the Order Traveler and Production Picking List functions within the MFG - Production module. This form is very useful if the Production module is not installed or not yet implemented. The form reflects much of the information that can be found in the Bills of Material master list or other forms, but in a simplified and shortened format.

Interactive Views

Interactive View functions are designed to quickly give you access to manufacturing information in less detail than a report. The summary nature of interactive views is designed to deliver information efficiently without having to sort through a lot of additional information.

Bill of Material, Component Availability and Available to Promise information can be displayed through the interactive view functions.

  • Bills of Material View: The Bills of Material View uses a tree concept in a Microsoft Explorer-type setup to help you easily view a BOM from top to bottom.
  • Component Availability View: The Component Availability View function is designed to allow you to see the material component availability based on the building of a specified number of a given assembly. You can immediately know which component materials you are low on and by how much. This inquiry saves you the time of having to calculate all of the quantities required of each subcomponent, and then checking the inventory availability of each one. The quantity of the finished assembly that you can build is dictated by the material component with the least availability.
  • Available to Promise View: The Available to Promise function allows you to quickly view the availability of any given inventory item. The system displays two availability dates for the item. These dates are generally future dates. The first date is the first available date. The second date is the first available date that does not compromise another pending order.

    This function differs from Component Availability in these ways:

    • It checks the availability of any item rather than just BOM items.
    • It doesn’t consider component availability.
    • It takes into consideration the passage of time.

Standard Costs Maintenance

Use the standard cost variance functions to maintain standard costs. Standard costs may not always be accurate. You change them at infrequent intervals with the intention of creating a standard cost that you can “live with” over a long period of time where the actual costs may be fluctuating. If you are using standard costing as an inventory costing method, an important feature of the standard cost maintenance functions is the ability to post journal entries to GL for changes to standard costs of inventory and do so on a batch basis.

Master Lists

Master Lists are basic reports that display the contents of the main files, but do not show historical detail, or complex calculations. The purpose of the master list is to review for accuracy the master file information that you set up, or to check the appearance of sections such as user-defined fields. The following lists are available:

  • Bills of Material – a comprehensive list of all data stored in the Bills of Material master record.
  • Media Groups – prints a list of media groups and their descriptions.
  • Engineering Change Orders - Prints the engineering change orders details.

Some Frequently Asked Questions about the Manufacturing modules

 

Workflow

Periodic Tasks

The Bills of Material module provides a solid base you can use to define, track, and review. There are no daily tasks required, but there are periodic tasks. You must build bills of material (BOMs) as you need them and adjust standard cost variances when necessary. Some of the periodic tasks you may want to perform include:

  • Set up BOMs
  • Import BOMs
  • Adjust standard costs

Set up Bills of Material

The Bills of Material function within Setup and Maintenance is the most important function in the Bills of Material module. All elements of the BOM are created using this function. Most other functions in the Bills of Material module are designed around this process, making the maintenance of the bill easier, more accurate, efficient, and flexible. The BOM consists of both material components and routings.

NOTE: If you do not have the Routing and Resources module installed, you cannot use the routing features of the Bills of Material module.

Even if you are using the Routing and Resources module, you can disregard routing steps completely and create BOMs that are solely material components, if needed.

Traverse Manufacturing uses industry standard methodology for creating BOMs. Bills of material are always created one level at a time without regard for other levels above or below.

For example: If your BOM has six levels, you must create a minimum of six different BOMs. The system understands and makes the proper connection between the various levels. If Assembly A consists of a subassembly B and a raw material C, and Subassembly B consists of raw materials D and E, you must create two BOMs: one for A and one for B. It doesn’t matter in what order you create them. Once you create both bills, the system sees that BOM A consists of a B, and that B has its own BOM. When a production order is placed for product A, and Subassembly B has been set up as a non-stocked subassembly within Assembly A, the production application calculates the required quantity of components B, C, D, and E. (Component B is actually a subassembly, so you could say that no quantity is required since it is being made using components D and E during the production. If Subassembly B was set up as a stock subassembly, then the system would require only B and C).

Bills of Material Elements

The BOM includes general information such as the drawing number, engineer, last updated date, effective dates, unit of measure, MRP code, and media group. You can additionally mark the BOM as a stocked or non-stocked assembly, indicate whether or not this BOM is a planning bill, and mark the BOM as the current revision.

The primary element of the BOM is the physical materials used in different quantities which you can optionally attach to routing steps. The routings (or processes) are more intangible and consist of items such as cost per hour, time required, physical location, and nature of process. Select the operation to be performed in terms of where and with what machinery and labor the operation will be done. Routing steps are optional for any BOM, but using routing steps enables you to have more control over the actual processes involved in the production cycle.

The information on the Routing tab of the Bills of Material screen is predefined using the Routing and Resources module. This allows you to quickly set up routing steps in a simple manufacturing environment by entering only the routing step and the operation ID, and allowing the system to default the rest of the fields.

When you enter the physical materials used, in addition to the component item ID, you can define a unit of measure, method of use, cost group, scrap percentage, and quantity. A notes section exists for additional comments. You can also define by-products at this point that can offset the BOM cost. Set the Detail Type box to 'By-Product' instead of 'Material' to do this. You can have up to 999 components on one level of a BOM.

You can also specify non-stock or miscellaneous items which are not to be quantified and/or costed, but are helpful to include in the BOM. These are items such as grease, shop rags, sandpaper, and miscellaneous nuts and bolts that you choose not to cost or count. Non-stock items can have quantities and costs and those quantities and costs are utilized in cost estimation and in the production module.

Import Bills of Material

Use the Import Bills of Material function to import ASCII data files into the BOM database. These files can be in comma delimited or fixed length record format and are generally output from a type of CAD system. For more information and instructions on data imports, read the Data Import Tutorial in the Traverse Knowledge Base.

The first step in the import process is to set up the import parameters. Next, map the import file fields to the Traverse BOM fields, import the files into a temporary table, verify that the values are defined correctly, and then write the files to the BOM database. You can also use this function to set up multiple layout parameters and assign unique IDs to each one.

The Import Bill of Material function is not designed to handle every possible scenario and only allows for the importing of material items. But, it can be a great time saver if this is a frequent process for you.

Adjust Standard Costs

Use the standard cost variance functions to maintain standard costs. Standard costs may not always be considered accurate. They change at infrequent intervals and are assigned with the intention of creating a standard cost that can be “lived with” over a long period of time where the actual costs may be fluctuating. If you use standard costing as an inventory costing method, an important feature of the standard cost maintenance functions is the ability to post journal entries to GL for changes to standard costs of inventory and do so on a batch basis.

The general work flow for adjusting standard cost variances is a two phase process.

The first phase is to update the low level component standard costs. To do so, follow these steps:

  • Compare current unit costs to existing costs using the Cost Variance Report function.
  • Adjust the costs using the Update Standard Costs function.
  • Print the Standard Cost Adjustment Report using the Standard Cost Adjustment Report.
  • Update Inventory standard costs and optionally post them to GL using Post Standard Costs Adjustment.

Cost Variance Report

When adjusting standard cost variances, use the Cost Variance Report to compare the current unit costs of different components of a BOM, as well as the BOM cost, to the existing costs in Inventory. There are several parts to this report.

The first is a comparison of the total BOM cost. It is calculated using the current component makeup of the BOM to the current standard cost maintained in the Inventory master table.

The second part is the component variance, which is a comparison of the components’ standard unit cost to their actual LIFO unit costs currently in Inventory.

The third part of the report deals with labor and machine costs. This section, which only appears if you are interfaced with Routing & Resources, is a comparison of time rather than cost, since process cost rates are predefined in the Routing and Resources module and cannot be overridden in the BOM. The report compares BOM operations costs to the standards set up in the Labor Type and Machine Group tables. This variance may or may not be meaningful depending on how you have set up labor types and machine groups.

This report is not meant to subtotal and give overall information about the BOM. To do that, you need to include subassemblies and overhead. Also, the lot size needs to be included because it affects the setup cost variances in the labor and machine areas. This report is strictly meant as a tool to point out possible areas of concern due to changing costs of both materials and process steps. High variances in components could mean the standard cost of your components should be changed. In the machine and labor area, a large variance could point out that you have adjusted your times in the master tables, but haven’t changed them in the BOM. It could also mean that the BOM is unique and the variance is meaningless. Variances in the assembly may indicate your estimated costs changed and either the standard cost or the rolled up current cost may be inaccurate.

Update Standard Costs

If you found costs that need adjustment when reviewing the Cost Variance Report, use the Update Standard Cost function to make those adjustments. Since the Traverse Inventory system does not provide a utility to quickly change and record standard costs adjustments, you must make those changes here using this function. You can move quickly through the Inventory system, changing standard costs of component items where needed.

NOTE: This function records the transactions but does not change the standard inventory cost online. It writes cost changes to the transaction table, which is the source for the Standard Cost Adjustment report. Once you finish updating standard costs, print this report and post the standard cost adjustments.

Standard Cost Adjustment Report

When you finish updating standard costs, print the Standard Cost Adjustment report.

This report shows the cost update information and journal entries, which are created in GL, and is your last chance to review the data before you post it to GL and Inventory.

Post Standard Cost Adjustments

Use this function to update Inventory standard costs and post entries to GL. A credit is made to standard cost adjustments as defined in the GL-Default section of the Business Rules screen, and a debit is made to the individual asset account for items defined in the Inventory database. The Inventory Standard Cost field in the Inventory database also changes when you post.

NOTE: These GL transactions only get done if you use Standard Costing as your costing method in Inventory.

The second phase in the general work flow for adjusting standard cost variances is to update the assembly standard costs. To do so follow these steps:

  • Roll up existing BOMs using the Roll Up Standard Costs function.
  • Print the Standard Cost Adjustment report again.
  • Post again to update Inventory standard costs and post entries to GL using Post Standard Costs Adjustment.

Roll Up Standard Costs

Once your component costs are accurate and you have posted transactions to Inventory, you can roll up the existing BOMs. This process adds up the elements of one or all BOMs, recalculating material, labor, overhead, and subcontracting costs. The standard cost adjustments required for each BOM are automatically created and written to the transaction file using this function. Later, you can post these costs to GL. Although you cannot create new transactions for assemblies, you can edit or view generated transactions created by the Roll Up Standard Costs function. All of the entries are then written to the standard costs adjustments table and later appear on the Standard Costs Adjustments Report. You can then post these costs to GL.

Standard Cost Adjustment Report

Once you finish rolling up standard costs, print the Standard Cost Adjustment report. This report shows the cost update information (if you are using standard costing) and journal entries, which are created in GL, and is your last chance to review the data before you post it to GL and Inventory.

Post Standard Cost Adjustments

Post again to update Inventory standard costs and, optionally, to post entries to GL.

Back to top of page