This time a few theoretical posts about BOM handling, how the BOM is used in different processes as Engineering To Order (ETO), Make To Order (MTO) and Build To Order (BTO) organizations and finally which PLM functions you would expect to support these best practices.
I noticed from various lectures I gave, from the search hits to my blog and from discussions in forums that there is a need for this theoretical base. I will try to stay away from too many academic terminologies, so let’s call it BOM for Dummies.
Note: All information is highly generalized to keep is simple. I am sure in most of the companies where the described processes take place more complexity exists.
What is a BOM?
A BOM, abbreviation for Bill of Materials, is a structured, often multi-level list of entities and sub-entities used to define a product
I keep the terminology vague as it all depends to who is your audience. In general when you speak with people in a company that does engineering and manufacturing, you have two major groups:
- The majority will talk about the manufacturing BOM (mBOM), which is a structure that contains the materials needed to manufacture a product in a certain order.
We will go more in depth into the mBOM later. - When you speak with the designers in a company they will talk about the eBOM, which is a structure that contains the components needed to define a product.
Both audiences will talk about ‘the BOM’ and ‘parts’ in the BOM, without specifying the context (engineering or manufacturing). So it is up to you to understand their context.
Beside these two major types of BOMs you will find some other types, like Conceptual BOM, Customer Specific BOM, Service BOM, Purchase BOM, Shipping BOM.
Each BOM is representing the same product only from a different usage point of view
The BOM in an Engineering To Order company
In an Engineering to Order company, a product is going to be developed based on requirements and specifications. These requirements lead to functions and systems to be implemented. For complex products companies are using systems engineering as a discipline, which is a very structured approach that guarantees the system you develop is matching all requirements and these requirements have been validated.
In less complex and less automated environments, you will see that the systems engineering is done in the head of the experienced engineers. Based on the requirements, they recognize solutions that have been done before and they build a first conceptual structure to describe the product. This is a conceptual BOM, often only a few levels deep, and this BOM is mainly used for costing and planning the work to be done.
A conceptual BOM could like this (open the picture in a separate window to see the animation)
Depending of the type of engineering company, they are looking for the reuse of functions or systems. The reuse of functions means that you manage your company’s Intellectual Property (IP) where the reuse of systems can be considered as the reuse of standard building blocks (modules) to build a product. The advantage of system reuse of course is the lower risk, as the system has been designed and built and tested before.
From the conceptual BOM different disciplines start to work and design the systems and their interfaces. This structure could be named the eBOM as it represents the engineering point of view from the product. In Engineering to Order companies there is a big variation on how to follow up after engineering. Some companies only specify how the product should be made, which materials to use and how to assemble them. The real manufacturing of the product is in that case done somewhere else, for example at the customer site. Other companies still do the full process from engineering and manufacturing.
As there is usually no reuse of the designed products, there is also no investment in standardizing items and optimizing the manufacturing of the product. The eBOM is entered in the ERP system and there further processed to manufacture the product. A best practice in this type of environments is the approach that the eBOM is not a 100 % pure the eBOM, also items and steps needed for manufacturing might be added by the engineers as it is their responsibility to specify everything for manufacturing without actually making the product.
This animation shows on high level the process that I described (open the link in a separate window to see the animation)
What PLM functions are required to support Engineering To Order
The following core functions apply to this process:
- Project management – the ability to handle data in the context of project. Depending on the type of industry extended with advanced security rules for project access
- Document management – where possible integrated with the authoring applications to avoid data be managed outside the PLM system and double data entry
- Classification of functions and/or systems in order to have an overview of existing IP (what have we done) and to promote reuse of it
- Item management – to support the eBOM and its related documentation. Also the items go through a lifecycle representing its maturity:
– The eBOM might be derived from the mechanical 3D CAD structure and further extended from there.
– For design reviews it would be useful to have the capability to create baselines of the eBOM including its specifying documents and have the option to compare baselines to analyze progress
– The completed eBOM would be transferred to the ERP system(s). In case of a loose ERP connection a generic XML export would be useful (or export to Excel as most companies do) - Workflow processes – to guarantee a repeatable, measurable throughput of information – both approval and change processes
Optional:
- Supplier Exchange data management – as many ETO companies work with partners and suppliers
- Issues Management – handling issues in the context of PLM gives a much better environment for a learning organization
- Requirements Management – specially for complex products, tracking of individual requirements and their implementation, can save time and costs during delivery
- A configurator allowing the sales engineering people to quickly build the first conceptual BOM based on know modules combined with engineering estimates. This is the base for a better controlled bidding / costing
Let me know if this kind of posts make sense for you …..
Next time we will look at the BOM in a Build To Order process
9 comments
Comments feed for this article
January 19, 2010 at 9:04 pm
Oleg Shilovitsky
Jos, Love it!… I think we need to have more such posts, since people perceive PLM a complex and unclear discipline. I hope you had chance to see this in the past – PLM Action Plan For Dummies (http://plmtwine.com/2009/05/21/plm-action-plan-for-dummies/). Best, Oleg
Thanks Oleg, I fully agree with your comments – PLM is not complex – and regarding your post I agree – you can see my comments below the post there 🙂
LikeLike
January 19, 2010 at 10:51 pm
Jovan (Yannis)
Hey Jos, this is a great post. For complex products I see several challenges:
– The configurator becomes mandatory if you want to maximize the reuse of the functions (a bit more efficient than classification). It might help as well to quickly select Features and Accessories.
– The problem is how to track the effect on F&A changes on the EBOM if the configurator is used only by sales engineering people? How to track project changes. From the knowledge I have there is no integrated approach (either process or tool) to manage that efficiently.
– You need a full traceability of the BOM to the customer requirements which is very hard to attain manually given the number of parts in those products.
The problem we are facing as well in ETO processes, is the management of P&ID. It’s the logical diagram of your product / sub system. It is basically the same for the product (think about elevators for instance, they all have the same logical definition), but the end product is very different from one order to another. Logical diagrams (many ins, many outs) are not managed well by PLM tools today because they have a hierarchical approach (one in, many outs)…
ETO is very fascinating because in a world where everything is customized, it becomes a new way to think products.
Yannis hi, thanks for your extensive comment with a lot of points for further discussion. Regarding reuse of functions, I believe this is a part of classification, as the implementation of functions can be customer specific. Function reuse is for me knowledge reuse, where the implementation is not always predictable. The advantage is that you know you have done something similar before.
Regarding the connection between sales and engineering, I believe here more advanced requirements management, like implemented with systems engineering is a solution, but special in the mechanical industry (F&A as you call it) the overhead of systems engineering is not yet proven.
To conclude, you gave me enough to write about in the future. Thanks for that and look at Built To Order, where customer specific engineering and standardization are combined
Best regards
Jos
LikeLike
January 20, 2010 at 4:56 pm
Yohan Lee
Jos, enjoyed the post greatly. My personal experiences in implementing PLM always involve a philosophical discussion on whether the Manufacturing BOM belongs in PLM or in ERP/MRP. I always arrive on the conclusion of “it depends”. For companies that do both design and manufacturing and want to closely manage the pricing/cost history of their products, a completed mBOM may be required in PLM. What are your thoughts?
Yohan thanks for your reply. I agree with your statement that having the pricing and costs in PLM makes sense for products that you reuse.
In one of my upcoming posts, I will describe the Build To Order process, where this is essential. It gives you much more security and accuracy in the bidding phase.
In the current ETO model I described the idea is that this type of companies design unique products based on their knowledge not on existing products
Best Regards
Jos
LikeLike
January 20, 2010 at 5:21 pm
Oleg Shilovitsky
Guys, I have one question – for how long, you think, systems and people around will try to do decide WHO owns Bill of Material? Maybe I’m dreaming, but I think, we need to find a way to use one (or synchronized) Bill of Material –> http://plmtwine.com/2009/10/14/seven-rules-towards-single-bill-of-material/. So, the question of “who owns” should be taken out of table. What do you think? Best, Oleg
Oleg thanks for your question.
I believe the discussion is not about who OWNS the Bill of Material, but who adds information at which stage of the product development cycle. The fact that we can represent the product in different views does not mean ownership – it is more ease of use.
BTW the discussion will be on-going – see linked-in ‘s discussion: http://tinyurl.com/ye6hbjq
Best Regards
Jos
LikeLike
January 21, 2010 at 11:47 am
Prashant Dhonde
Great post Jos 🙂
LikeLike
February 3, 2010 at 1:07 pm
vishwanathn
Jos,
Nice article. Great thought process. I would like to add Cost and Quality perspective early in the cycle for ETO. Even though they could be part of project management – this is a potential area of focus for most ETO organizations. Configurations and cost and quality per configurations will pose the challenges for these companies.
Your thoughts?
Regards,
-Vishy
Thanks Vishy – and you are right – while my focus was trying to stay with the basics around BOM, cost and quality management are important drivers, sometimes as you said handled in the context of project management. A best practice that I have seen (and promote) is the usage of functional classifcation and issue management integrated in PLM. Functional classification allows you to store and review information about solutions (technologies, functions) you have done before and when you integrate this with issue management you have a good overview of what to do and what to expect. A learning organisation reducing risk and therefore have a positvie improvent towards qualtiy and cost. It could be a separate post …….
Best regards
Jos Voskuiil
LikeLike
March 29, 2010 at 12:54 am
Ben Hagler
WOW!!!
Great Article.
This is all new to me but … I need to get up to speed.
I have a small ETO company. Over the last few years we have gone from one engineer (me) to five. All our designs are in SolidWorks. Many times we work out what we are selling in the 3D model. Believe it our not.. we have NO item master. We simple grew to fast over 5 years. We therefore do not have any BOM’s We have not been using a PLM or PDM. We simple make stuff and hope we can service it after it ships.
To correct this crazyness. We have purchased Microsoft AX and PTC’s Windchill. PTC .. is providing a new standard off the self intergration … two way.
We are currently in the process trying to define all our design, and manufacturing from scratch. This is really tough becasue we need to define everything item number, descriptions of items numbers, and the crazy complicated world of manageing 3D models, configurations, file names, drawiing numbers eBOM to mBOM to BOM’s once the product is in the fielld becasue overtime it will change.. ie the CAT engine is replaced with a Cummins engine … all must be tracked.
I need advice..
Thanks for your comment Ben,
it seems like you have all challenges ahead. I will contact you by mail to see if I can give you a quick guidance in the right direction.
Best regards Jos
LikeLike
July 14, 2012 at 5:00 pm
Vikram Shah
Hello Jos,
Did you post the BOM definition details for Built to Stock and Configure / Made to order as well ?
I am also looking for details of how the BOM definitions contribute towards the organization metrics.
Regards, Vikram
Vikram hello
For the sake of simplicity I did not go in all the variants of business processes around the BOm in my blog. Depending on the complexity of the product in a Built to Stock process you will see an R&D step, defining and maturing a product around an EBOM and next a long term focus on manufacturing, using a dedicated MBOM when producing from one plant or a generic and more plant specific MBOM in case of global production. I have described the concepts of Configure to Order or Make to Order in the CTO and BTO process (see older posts)
Regarding your second question I am not sure what you mean by how BOM definitions contribute. It is more the integrated and well understood process that brings the benefits, not the definitions.
Best regards
Jos
LikeLike
April 2, 2013 at 12:22 pm
lakshminadh j
Dear Jos
Great article…
BOM for ETO business is very interesting. Specifically hightly customized productlines with large BOM lines.
How can we reuse the BOM while the boundry of the building blocks / Functional block keep changing for each order, for large Product lines like Power generation equipment what could be right approach for the BOM structuring ?
lakshminadh hi, what I have seen in this area is that companies have a functional classification first for all their major equipments. The functional model describes the main functions and parameters for such an equipment. The next step is that either you are able to define design variants per equipment – more standardization for each equipment variant or you still need to design a variant in that class. In the case of an existing design variant with options/features defined, you might have already a related EBOM to be resolved. In the case of a new design there might be only some standard templates available. The solution is not as simple as the answer here, as all depends on the customer’s legacy and modularization level. Best regards Jos
LikeLike