3 Modern BOM Management Challenges

Bill of Materials. Probably the key element in product development and manufacturing. Surprisingly enough, many companies are still struggling with this topic. Bill of Materials drives lots of controversy and discussions. Why it is so important? On a surface you may think BOM is a really simple thing. Just a list of components. However, if you think about product development, BOM is a recipe for a product that you are designing, engineering, manufacturing, supporting and disposing. I’ve been thinking about modern trends – cloud, social, mobile, consumerization and others. In my view, they are going to impact Bill of Materials management functions in a much radical way than you may think initially. Today I want to focus on what I call 3 modern challenges affecting and impacting Bill of Materials.

Challenge 1: Internet and lean manufacturing processes

Internet is probably the biggest change that happened to us during the past 20 years. It drives changes in the way we work. Connected and lean. Lean processes means a simplified process organization in a company. Ordering systems are changing as well. Simplified materials flow and reducing of shipped items and prefabricated assemblies create a different requirements to BOM functions. BOM hierarchy becomes less important. The completeness of BOM during the process sometimes not required and sometimes can be managed on demand driven by online ordering systems. The main two elements of functionality – BOM structure and approval process are disrupted now. The number of bills can be increased, at the same time, since number of orders will be growing as well.

Challenge 2: Customization and "new makers"

There is a strong trend to personalization and customization. It comes everywhere – electronic, computers, fashion, etc. To manage all possible configuration becomes very critical. The number of configuration can grow significantly. The flexibility of systems needs to be increased. What yesterday was true for ETO (engineering to order) company only, today becomes a reality for many mass manufacturers. In most of the cases, you will need to create a separate BOM for each customer order. "New makers" – companies that are capable to manufacture small amount of very specific products are trending as well. People like to be unique products. The new manufacturing firms (sometimes very small) are experiencing additional pressure on how to proceed with the design and manufacturing. Large and complex BOM/PLM systems cannot help them.

Challenge 3: Granularity and contract manufacturing

Price competition leads companies to find somebody else to produce some of the components. It leads to outsourcing, offshore and many other options to make the same work in a different place. Bill of materials is a critical element in supporting of contract manufacturing. You need to have an ability to organize BOM in a way that allows you enough granularity and at the same time makes engineering and manufacturing BOM much simpler. Ability reconcile multiple bill of materials and support new type of change processes becomes even more important.

What is my conclusion? Bill of Materials is a critical element in the success of many manufacturing companies. Think about driving maps. In the past we printed it on a paper, folded and put next to your driver seat. Now it is different – social GPS systems can alert you about driving conditions and suggest alternative routes. You need to have a new tools to manage BOMs. Traditional BOM management systems won’t survive in a modern manufacturing world. This is a wake-up call for PLM vendors and other software companies in manufacturing world. Just my thoughts…

Best, Oleg

Image courtesy of [jsccreationsz] / FreeDigitalPhotos.net

2 Responses to 3 Modern BOM Management Challenges

  1. RealTimeRick says:

    Hi Oleg,

    One of my FAVORITE topics….

    The BOM discussion always starts out civil. It is relatively easy navigation if you limit the discussion to BOM consumers. Where it starts to get dicey and contentious is when the conversation turns to BOM ownership.

    You PLM guys (as I remove myself from the group for a moment) feel you own the BOM, as you design the product.

    “Not so fast”, says ERP. “We’re buying all of the raw materials and components, WE own the BOM because we control the MONEY”.

    “Yeah?”, says manufacturing. “We have the final say, as we determine how this product gets put together, and, frankly, the BOM we get from Design just doesn’t do the job.”

    “What about me?” says CRM. “We have to maintain this creation long after you guys have moved on to the next product!”

    Technology does not solve the ownership conundrum, and therefore only scratches the surface of the REAL issues of BOM.

    – RTR

  2. Rick, thanks for the comment! Yes, BOM is a fascinating topic each time you touch it. The debates about “BOM ownership” are endless. Do you think one day we come to “one BOM”? Just my thoughts…

    Btw, you might be interested to read my next post about BOM –

    BOM 101: How to optimize Bill of Materials

    Best, Oleg

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