Why is BOM Important in Manufacturing?

Bill of Materials

What’s Inside ?

• Introduction • Types of BOM • Challenges faced without a BOM • Why is BOM important in manufacturing?

• BatchMaster ERP’s Bill Of Materials • Types of BOM BatchMaster ERP offers • Features of BatchMaster BOM • Advantages of BatchMaster BOM • How can BatchMaster ERP help ?

• Conclusion 2

Introduction By definition Bill Of Material (BOM) means: • A centralized source of information used to manufacture a product.

• Denotes a list of raw materials, sub-assemblies, subcomponents, parts and the quantities of each needed to manufacture an end product.

• An engineering term that completely showcases the design of a product. Manufacturers that build products start the assembly process by creating a BOM. • Includes detailed instructions on how to assemble the product – from inception to the finished product ready for shipping – including all the packaging, labeling etc.

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Types of BOM Single-Level BOM • The simplest list for manufacturing a product.

• Can be used where there are no complex processing steps or sub-assemblies.

Multi-Level BOM • The list not only contains the final assembly items but also the materials and quantities used in every step below.

• Allows creation of parent/child relationships and can generate more complex and accurate costing down to the raw material stage.

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Challenges faced without a BOM Absence of BOM results in: • Poorer material planning • Material shortages • Inaccurate product costing • Raised production costs • Frequent delays in shipments • Lost sales • Increased risk of product liability • And, lastly – Halts during production 5

Why is BOM important in manufacturing ?

• To avoid stock-outs of materials used in production • To manufacture a product that is cost-effective and within budget

• To ensure better planning • To gain better analytics and data insights • To save time by diminishing manual process and reduce overhead costs

• To unite all departments with one-source of information • To provide consistency in all business operations

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BatchMaster ERPs Bill of Material • BOM is the Master Data in the Production Planning function of Manufacturing and central repository for other functions • The bill of material functionality helps manufacturer know the complete hierarchy of the product from start to finish • Allows the user to define a product structure with all the essential information about the nodes, i.e. the parent master data in the list to all the sub-ordinate ones • The composition also includes intermediate nodes, if any before creating an end product • Begins with defining the base quantity product that is to be produced, followed by linking various components relative to the base quantity • Every item of the BOM comprises of - Item Number, Code, Name, Description along with Quantity, and Unit of Measurement • It helps to manage and oversee resources, identify materials to reduce wastage with accurate information, and facilitates better decision making to manufacture cost-effective & efficient products.

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Types of BOM BatchMaster ERP Offers •

Container BOM: - Used by bulk manufacturers - Especially, when they manufacture in bulk and sell it in different unit of measurements

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Intermediate BOM: - Links formula to a particular item location - No packaging is required for an intermediate item - Created in the mid stage i.e. after the raw materials are processed and an intermediate(co-product/by-product) is formed

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Finished Good BOM: - Links formula to an item location - The packaging items and their quantities are also defined - Created for a finished good manufactured

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Assembly BOM: - Used for discrete items - Allows the assembling of the final product 8

Types of BOM BatchMaster ERP Offers

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Features of BatchMaster's BOM Software • • • • • • • • • • •

Comprehensive Bill Of Materials functionality Supports multi-level manufacturing BOM Complete integration with the entire BatchMaster ERP solution Encloses top level BOM item Flexibility to define Fill Level in the desired unit of measurement Serves multiple packaging option Classify the top assembly items, assembly types, and status of the BOM components associated with the formulas Caters your needs for both Process (Formula BOM) and Discrete (Assembly BOM) Manufacturing Dispatches full view of the BOM hierarchy Single BOM allocation with multiple formulas Access and reuse previous BOM versions 10

Advantages of BatchMaster BOM Helps manufacturing businesses with : • • • • • • • •

Planning for purchases of raw material Provide the basis for inventory control Optimizes inventory Tracking and planning material requirements Maintaining accurate records Establish groundwork for proper product costing Assist operations in planning workflows and work centre Takes measure to reduce waste

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How can BatchMaster ERP help?

• Create all types of BOM and manage them easily.

• Provide more accurate lead time in production scheduling.

• Allow users to compare the current version of BOM with previous versions, view & revert to the prior version, and even purge the prior version.

• Track and plan material requirements accordingly • Accurately plan purchasing of raw materials • Estimate actual material costs • Allows multiple packaging of same formula • Waste reduction

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Conclusion • BOM is a centralized source used to manufacture a product and serves as a basis for product design and manufacturing business activities – R&D, Production, Logistics, Procurement, Inventory, Pricing, and Sales • Final products cannot be produced unless BOMs are not created • BOM mistakes can be an expensive affair for your organization • BOMs are often tied to production order, so that products manufacturer can know the materials are in stock or not • If you are a process manufacturer, then BatchMaster ERP will help in streamlining your business operations and managing it effectively • We cater to industries such as – Pharma, Food, Beverages, Chemicals, Paints, Fashion, Healthcare etc.

• Our prime focus in helping you in reducing your operational cost and increasing your profit margins

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About BatchMaster  30+ years of experience  ERP solutions for small to mid-sized industries  SAP B1 and Microsoft certified solution

 Over 40,000 users worldwide  Headquartered in California, with footprints across the world  A global presence with offices in 3 continents- North America, Australia, and Asia  7 offices round the globe  Available in 3 languages- English, Chinese, and Spanish  Original developer of formulation system in ERP  Consistent record of never exceeding implementation time of 350 to 500 hours 14

How to connect with us Visit us on: https://www.batchmaster.co.in/solutions/bill-of-materials.aspx Or, send your queries or demo requests at: sales@batchmaster.com You can also refer our blog to read about it more: https://www.batchmaster.co.in/blog/importance-and-types-of-bill-of-materials-boms-inmanufacturing// And, Please feel free to call us or contact us on: BatchMaster Software Pvt. Ltd. (An ISO 9001:2015 Certified Company) Brilliant Solitaire, Plot 6 – A, Office 201-A to 204-B Scheme 78, Part-II, Indore - 452010 Ph: +91-731-4008039 +91-731-4008070 +91-731-4008035 Fill the form directly on: https://www.batchmaster.co.in/contact.aspx 15

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Write to us on : sales@batchmaster.com

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