BOM 101: How Many Levels Do You Need in BOM?

January 30, 2013

I’m continue my BOM 101 series of posts. When working on bill of materials, you can often hear about the ability of BOM management software to support so-called "multi-level" BOM. You can search for the definition of multi-level BOM using Google and find many results. I found the following definition of multi-level BOM on Arena website quite balanced. Here is the passage from the Mult-level BOM article:

A multi-level BOM, also referred to as an indented BOM, depicts parent-child relationships and shows the hierarchical structure of assemblies and their related parts and components. A multi-level BOM is essentially a nested list whose parts or items are listed in two or more levels of detail to illustrate multiple assemblies within a product’s BOM. In contrast, a single-level BOM depicts one level of children in an assembly and only the components needed to make that assembly are listed.

In the past, when BOM was managed using paper and spreadsheets, to create multi-level BOM wasn’t a simple task. Computer systems create an opportunity to manage and manipulate easily with multiple levels of BOM. However, the question people are asking usually – how many levels of BOM do we need? This simple question is actually leads to many interesting discussions. From my practice it related to many factors. The most typical are – type of BOM (engineering, manufacturing, support), type of the product, maturity of product development and many others.

I found an interesting writeup about BOM levels in the Frank Watts’ book – Configuration Management Metrics. Navigate to the following link – I was able to access this book fragment using Google Books. Here is an interesting passage:

The tendencies of the companies to create multi-level assembly structures seems to be overwhelming. This analyst has witnessed 11 levels at a couple of companies and had a seminar attendee tell about 16 levels. Many departments wish to add structure for their apparent need and many needs are not in best interest of the company as a whole. Because agreement cannot be reached on one structure, often an "Engineering BOM" and a "Manufacturing BOM" are created. Often a material folks create "Planning BOM". Many times various department can reach agreement only by adding additional layers to the BOM.

The following diagram shows the number of levels in BOM correlated to maturity of product development. The analyst believes a better communication can be achieved by creating a BOM with minimum levels of structure.

What is my conclusion? The fact you can create multiple levels of BOM doesn’t mean you need to utilize it at full capacity. Multi-level BOMs are complicated and adding an additional work in the process of changes. How to maintain the right number of BOM levels? I’m interested to learn more about your experience. How many BOM levels do you have in your company ERP/MRP/PDM/PLM system? Speak your mind.

Best, Oleg

Investors are looking for “cool PLM kids”

January 30, 2013

For many years, enterprise was considered as a boring space. It was so much fun to talk about web, gadgets, Google and many other "cool" things. Why to get worried about enterprise application? Most of the people might think enterprise isn’t sexy thing. Isn’t it just about ERP, finance, big bosses and decisions that taken somewhere on the management floor? What was visible for the last ten years is huge technological development in the space of web, internet, mobile and consumer applications. This is what people were blogging and talking about. This is where all efforts and technological minds were striving. Consumer IT was "on fire" during the decade of 2000s. Our life and state of mind changed with web, mobile devices and other cool apps. Last year, I posted – PLM: Ugly vs. Cool. Quite many people approached me after that post. It was very enlightening to see how big is demand of people for usability, ease and simplicity of enterprise software.

Nowadays changes are coming to enterprise space too. There are many confirmation about that. I was reading TechCrunch article – The Enterprise Cool Kids. Author is speaking about growing interest of investors to enterprise space and brings long list of startup companies focuses primarily in enterprise space. Here is my favorite snippet:

But the hype is changing. Conversations about “the next Instagram” at Coupa, The Creamery or on Caltrain have been replaced with staid assessments about the future of Big Data, storage and the cloud. The mobile, social, local gold rush of 2011 has been put on pause, at least as far as consumer Internet is concerned. VCs are staffing up with enterprise experts to handle the sharp shift in focus. We’ve even heard someone was working on something described only as, “a Path for enterprise.”

Some of the technologies developed by these companies can be relevant for manufacturing, product data management and PLM. Take your time and read the article. The examples of companies and use cases are very interesting. I captured three top common differentiators among these companies – ease of use, low cost and "coolness factor" in the way these companies are solving existing problems.

What is my conclusion? I see enterprise as a very interesting place these days. The amount of unsolved problems in the enterprise space is skyrocketing. Think about mobile phone 10 years ago. Then compare it with iPhone or Android. The majority of manufacturing companies are running software developed 15-20 years ago. Excels are everywhere. Now, imagine the potential to change it. Investors are looking for enterprise experts. I didn’t find companies associated with manufacturing and PLM in the TechCrunch list of enterprise cool kids. So, quest is open. We are going to see "cool PLM" coming sooner or later. Just my thoughts…

Best, Oleg

picture courtesy of TechCrunch article.


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